Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS BILL

Queen's consent, on behalf of the Crown, signified.

Order for Third reading read.

To be read the Third time upon Thursday.

LONDON TRANSPORT (NO. 2) BILL (By Order)

Order for Third reading read.

To be read the Third time upon Thursday.

LLOYDS BANK BILL (By Order)

Order for Second Reading read.

To be read a Second time upon Thursday.

Oral Answers to Questions — Education and Science

Teachers and Ancillary Workers

Mr. Jim Marshall: asked the Secretary of State for Education and Science what estimate he has made of the number of teachers and ancillary workers in education who will lose their jobs in the next year as a consequence of the Government's policy towards education.

The Under-Secretary of State for Education (Mr. Neil Macfarlane): This will depend upon decisions taken by individual local education authorities. It is not possible to estimate the numbers for England as a whole.

Mr. Marshall: Does the Minister accept that that is a totally unsatisfactory answer? Is he aware that it is a means by which the Government are evading responsibility for maintaining teaching standards in the State sector? Is he aware that large numbers of teachers and ancillary workers will be leaving the education service and that will inevitably lead to a decline in education standards? When will he wake up to the fact that local authorities are taking such decisions because of financial pressure from the Government?

Mr. Macfarlane: I shall deal with the two or three points that develop from the hon. Gentleman's question. We accept fully that the savings through the reductions in the school meals service have been necessitated by the desire to preserve the core of education standards in our schools. But the hon. Gentleman, and other Labour Members, must understand that pupil numbers will fall by

25 percent, between 1977 and 1989. The current reduction in teacher numbers, like reductions elsewhere in the education service, is as much a response to that as to expenditure cuts.

Mr. Speaker: Order. I remind hon. Members that long questions and long answers merely reduce the number of hon. Members who can be called.

Mr. Latham: Is my hon. Friend aware that if local authorities such as Leicestershire did not make economies in the education service, as elsewhere, the burdens on private ratepayers would be impossible and there would be a sharp reduction in the amount of employment by private business?

Mr. Macfarlane: I accept the point that my hon. Friend has forcefully made. He understands the Leicestershire situation fully. I acknowledge that the reduction in the number of ancillary workers employed in the schools is inevitable as pupil numbers fall. I want to make that clear. Natural wastage will play a major part in the rundown of numbers and we believe that large-scale redundancy is unlikely.

Mr. R. C. Mitchell: What is the Minister doing to monitor the situation? What steps will he take if he finds that a particular local authority is dismissing far more teachers than he thinks is reasonable?

Mr. Macfarlane: I do not think that the hon. Member has presented any statistics to my Department. So far we have not heard from him on that point. In the current financial year there have been 1,264 teacher redundancies and a further 4,483 teachers have accepted premature retirement. The figures for 1979–80 were, respectively, 1,334 and 2,271. The Department maintains a watch on the statistics and until hon. Gentlemen are prepared to provide evidence we shall have to wait and watch the position.

Mr. Flannery: Does the Minister realise that the massive education cuts, far beyond what one might expect due to falling rolls, have resulted in the sacking of large numbers of peripatetic music teachers? Is he aware that the musical life of a school is vital and is not a frill? What will he do to ensure that the musical life in the State sector will be carried on properly, as no doubt it is in the private sector?

Mr. Macfarlane: I do not accept the first point that the hon. Member made about massive reductions in expenditure on our education services. Therefore, the second part does not apply. It is a matter for local education authorities.

Educational Standards

Mr. Dubs: asked the Secretary of State for Education and Science what assessment he has made of the effects of the recent rate support grant settlement on educational standards.

The Secretary of State for Education and Science (Mr. Mark Carlisle): I gave my assessment of the implications of the recent rate support grant settlement, following consultations with representatives of the local authorities, in my answer to my hon. Friend the Member for Macclesfield (Mr. Winterton) on 16 December last year.

Mr. Dubs: Does the Secretary of State accept that the consequences of the rate support grant settlement were that the Inner London Education Authority would have had to cut its services below a level that even the Secretary of State would accept, and that therefore the ILEA's only course was to maintain its standards? Does the Secretary of State agree that it made the right decision?

Mr. Carlisle: I do not accept any of the premises underlying the hon. Gentleman's question. First, I do not accept that I am suggesting that the ILEA should cut its standards below what is acceptable. The rate support grant for the authority has been affected by the movement of rates away from inner London and by the fact that the ILEA has historically been a high spender. The amount of grant that it receives will depend on its budget. As I pointed out in a statement to the House last week, for every 1 per cent, by which the ILEA reduces its expenditure it will get another £4 million from the Government.

Mr. Emery: As the question concerns the whole country, will my right hon. and learned Friend point out to teachers and educationists generally that at a time of world recession it is impossible for the Government to continue with projected expenditure that was based on trying to win an election and that unless the Government get on top of inflation the money spent on education in the next two or three years will buy much less than it can purchase today?

Mr. Carlisle: I totally agree with what my hon. Friend says. As I have made clear on many occasions, the education services cannot be exempt from the need to reduce public expenditure and to bring it into line with what the country can afford. Unless we get our public expenditure more realistically in line with what we can afford, we shall have higher unemployment in future and more economic problems.

Mr. Beith: How can the Secretary of State still claim that there is money in the rate support grant for youth and community capital grants when education authorities, including many Conservative-controlled authorities, say that they cannot meet their statutory obligations satisfactorily in the face of the present level of cuts?

Mr. Carlisle: I confirm that for the purposes of arriving at the amount of relevant expenditure for education purposes I have assumed similar expenditure on the youth service in general terms as in previous years. I have visited some of the youth services in the area of the hon. Gentleman's local education authority. I realise that the services are under pressure in many parts of the country, but the Government have assumed that current expenditure should remain similar to the levels of previous years.

Mr. Adley: Is my right hon. and learned Friend aware that Dorset county council's decision on school meals, which was criticised by a number of Labour Members and by some trade unionists, has been widely accepted without demur by the parents in my constituency? Will he therefore commend the decision of the county council to other local authorities as an example of good housekeeping?

Mr. Carlisle: My hon. Friends remarks are a fair assessment of the reaction to the Dorset decision. I repeat

what my hon. Friend the Under-Secretary said earlier. We are anxious that authorities should make savings in school meals rather than in other parts of educational provision.

Mr. Kinnock: Does the Secretary of State recall saying on 16 December, at the time of the rate support grant settlement that reductions would have some impact on educational provision and numbers employed? Does he accept that only his hon. Friend the Member for Macclesfield (Mr. Winterton) is likely to accept his figure of a cut of £87 million in local authority expenditure as accurate and that, in fact, that figure is a gross underestimate, because school expenditure will be cut in 1981-82 not by £70 million, but by £150 million? Does the Secretary of State realise that, because of his refusal to fund school transport services and his miscalculation of the savings on school meals, there will be another £157 million to be found? [HON. MEMBERS: "TOO long."] I know that Conservative Members do not like it, but they are going to get it. School cuts next year will mean a monsterous £307 million being taken away from the children of this country. Does the Secretary of State think, in the light of such figures, that local education authorities can discharge their legal responsibilities under sections 8 and 61 of the 1944 Act, or does he accept that as "Education Magazine" said last week, he is presiding over "a period of catastrophe"? Does he not think that he ought to resign?

Mr. Speaker: Order. The same rules apply to Front-Bench spokesman as to Back Benchers.

Mr. Carlisle: In the speech that we have just heard from the hon. Gentleman he has not added a single new fact that I have not told the House myself. If he cares to read what I said on 16 December he will realise that I said that it was £87 million in addition to the assumed cut in the previous White Paper and I went on to add that there was also £37 million assumed as a result of the reduction in school transport. For the hon. Gentleman to suggest that he thought that I said that the reduction was £87 million, when it was greater, means that he did not read, or did not understand, my statement.
On the second part of the hon. Gentleman's question, I accepted in my statement that the additional cut was bound to have some effect on the level of provision in education. I said that we had to bring that level of provision into line with what the country could afford. I stand by that.

Teachers

Mr. Andrew F. Bennett: asked the Secretary of State for Education and Science how many teachers it is proposed will be employed by local authorities in England and Wales at 1 September 1981; and how this compares with the last three years.

Mr. Macfarlane: My right hon. and learned Friend made clear to the House on 16 December that the reductions then announced in educational expenditure in England in 1981-82 would have some impact on the numbers employed in the service. Provision for school teacher numbers is under review as part of the Government's expenditure plans. The staffing of schools in Wales is a matter for my right hon. Friend the Secretary of State for Wales.

Mr. Bennett: In making calculations for the rate support grant and the review, what estimate has the Undersecretary made of the cost of redundancy pay for teachers, unemployment benefit for them, at least for the first 12 months, and the loss of income tax from them? Is it not true that the sums that it costs the State in those ways are almost the same as the cost of employing a teacher?

Mr. Macfarlane: The Department has no detailed estimates of those sums, because they are a matter for local authorities and local social services. I must make clear to the Opposition that there has been a fall in teacher numbers of about 2·2 per cent, since 1978 and during the same period pupil numbers have fallen by 4·9 per cent. I should have thought that that was an important statistic and something which the Opposition should understand fully at the outset.

Mr. Greenway: Does my hon. Friend agree that while a sound pupil-teacher ratio is of the utmost importance, the deployment of teachers and the quality of the work that they do are crucial to a successful education for the children of our country?

Mr. Macfarlane: I accept that fully. I remind the House that the overall pupil-teacher ratio stands at the best level ever—under 19:1. We certainly do not anticipate any major change in 1981.

Mr. Newens: Does the Under-Secretary recognise that reductions in the number of teachers inevitably result in schools being forced to cut essential subjects from the curriculums, irrespective of the fact that there may be fewer pupils? In those circumstances, surely the Minister must recognise that the quality and standard of education are being reduced.

Mr. Macfarlane: The hon. Gentleman will understand what my right hon. and learned Friend has said in the House more than once. I certainly do not accept what the hon. Gentleman said at the outset of his question. We do not believe that education standards are necessarily determined by resource levels.

Teachers' Pay

Mr. Dover: asked the Secretary of State for Education and Science if he is satisfied with current arrangements for negotiating teachers' pay.

Mr. Mark Carlisle: No, Sir. I am consulting the teachers' and local authorities' organisations about possible changes in the present arrangements.

Mr. Dover: Does my right hon. and learned Friend agree, that, as well as salary levels, matters such as pupil-teacher ratios, working conditions and working hours should be discussed?

Mr. Carlisle: I have made clear to both sides of the Burnham committee that it would be helpful if pay and other conditions of service were brought into the same negotiating body. That is the basic purpose behind the document that I put to them.

Mr. Kinnock: Is the Secretary of State contemplating any major changes in arbitration procedure? If he is, can he tell us what earthly constructive point would be served by having a system that would guarantee blockages and deadlock by having a two party reference to the arbitrator?

Mr. Carlisle: I shall deal with that question in two parts. So far as the longer-term review is concerned, certainly the whole of the arbitration procedure is one of the matters that I put out in the document inviting discussion. In addition, as the hon. Gentleman knows, I have consulted the parties formally on whether the means of access to arbitration should be changed for the purpose of the current year, that is, from that whereby at the moment unilateral access should be made to that where it should be only by agreement of both sides. All that I can say at the moment is that I have received representations on this and I have received a deputation from the teachers' associations. I have not yet made a final decision, but I shall have to do so within the very next few days.

Student Loans

Mr. van Straubenzee: asked the Secretary of State for Education and Science whether he has yet come to a decision as to a loan scheme for students.

Mr. Whitehead: asked the Secretary of State for Education and Science if he is now in a position to announce his policy on student loans.

Mr. Allan Stewart: asked the Secretary of State for Education and Science when he expects to conclude his current investigation into the possibility of introducing a system of student loans; and if he will make a statement.

Mr. Nicholas Winterton: asked the Secretary of State for Education and Science if he will make a statement about his Department's continuing appraisal of the feasibility and desirability of replacing the present system of funding students in higher education with grants by a system of loans.

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): The question of loans for students is still under consideration.

Mr. van Straubenzee: During that consideration, will my hon. Friend bring to bear his formidable critical faculties on a proposition floated in some quarters, namely, that a loan should subsequently be repaid by way of an additional tax upon the graduate? Would not that inflict additional direct taxation on wealth creators? Can it really be supported by anyone who is a true supporter of the Prime Minister's policies?

Dr. Boyson: I am grateful for that question from my hon. Friend. Like him, I can identify myself as a true supporter of the Prime Minister's policy.—[HON. MEMBERS: "Stop playing for time."] I am not playing for time. When we asked for a report from the Department on various ways in which a loan or loan-grant scheme could be introduced, if we decided to do so, one of the schemes suggested was exactly that to which my wise friend referred, namely, a graduate tax. I believe that I went on record the same day as saying that I disagreed—as I am sure that my hon. Friend does—with such a graduate tax, which would seem to be a tax on intellect as well as direct taxation. Whatever schemes we are considering, we are certainly not considering graduate taxation.

Mr. Whitehead: Perhaps I can offer the Minister some more fraternal help from his own side. Do the recent reported remarks of the hon. Member for Cambridge (Mr. Rhodes James), as the Prime Minister's liaison adviser on higher education, indicate that no Government proposal


for a loans procedure to replace the present grants system for first degrees is under consideration? Does he realise, from the questions that have been asked today, that many Conservative Members as well as Labour Members believe that access to education should not depend upon the ability to pay or on the ability to pay back?

Dr. Boyson: I am getting helpful questions from both sides of the House today. On the question of a loan system, what we as a Government decide, knowing how much money will be available at any time, is the way in which that money can be used to the best advantage. I recommend that the hon. Member for Derby, North (Mr. Whitehead) should look at the number of people, including Open Universty students, who at present get nothing. There are people training for chiropody, speech therapists, those going into the law after their degree and those going into social work. However much certain people who are getting full grants may like it, hundreds of thousands of others are getting nothing. We shall consider the whole question.

Mr. Allan Stewart: Has my hon. Friend seen recent opinion polls which suggest that student loans would actually be far more popular and acceptable than is often believed? Does he agree with me that the effective choice is not between a loans system and a grant system but that there may well be a great deal to be said for a combined system including both grants and loans?

Dr. Boyson: What we are considering at present is the possibility of a grant-loan system, not a straight loan system. Recently information was put out regarding a vote at Edinburgh which, I accept, indicated that only 5 per cent, supported a direct loan system. But the same report showed that only 40 per cent, supported the present system of grants dependent upon parental income. So it is by no means as popular as some people pretend. A similar report from Bath and Exeter last year indicated that 56 per cent, of the students—[Interruption.] The hon. Member for Bedwellty (Mr. Kinnock) might learn something if he listened. I know that you, Mr. Speaker, are paying close attention to this. That report indicated that, 56 per cent, of students at Bath and Exeter preferred a loans system to the present grant system dependent upon parental income.

Mr. Hardy: Will the Minister take note of one clear fact about a possible loan scheme? Is he aware that in the industrial North and other areas of high unemployment a remarkable regional disparity would be inevitable, as young people would be reluctant to enter a period of indebtedness, and that if he was concerned about unity in this country he would not wish to act in that extremely divisive manner?

Dr. Boyson: I welcome the hon. Gentleman's question. I am sure that he will be as concerned as I am that under the present system the percentage of children from blue-collar worker families is now falling so that we are back to the level of the 1920s. Therefore, the present system is not solving the problem. If we introduce any system, it will certainly not penalise people earning low incomes when they enter college or low incomes when they come out.

Mr. William Shelton: When will my hon. Friend reach a decision?

Dr. Boyson: That is a very simple and direct question. We have now left the realm of philosophy and turned to

the calendar. I trust that within two or three weeks the Department can come to some form of conclusion as to whether there is a scheme that is likely to be viable, considering all the points that have been so wisely made in the House today. If we decide that there is, we shall put out a consultative document, so that everyone can spend even more time talking about it, and then make a decision in the summer.

Mr. Freeson: Can we take it from some of the hon. Gentleman's remarks that in considering this matter he intends to go much wider than grants to university students and consider the question of educational maintenance support generally; the disparities between the different systems of support under the Manpower Services Commission, industrial training boards, LEAs and the like? Does he accept that there is a need to look at the totality of financial support for students in education and training as well as in higher education?

Dr Boyson: I accept the points made by the right hon. Member for Brent, East (Mr. Freeson). As a neighbour, I always pay close attention to all that he says. There is no doubt that the present system has grown up in such a way, with different funding bodies, and that it is often unfair to those within it. Even within the education system for which we are responsible, the fact that some people are on mandatory grants while others are dependent upon an increasing number of discretionary grants is similarly unfair. I trust that we shall be examining the whole pattern.

Sir Albert Costain: Is the Minister aware that there is a good deal of resentment among students from the dependent territories, particularly from Hong Kong, at the large increase in fees? Will he consider the possibility of loans for those students?

Dr. Boyson: We have been in continued contact with Hong Kong regarding this matter. I believe that I actually said this in an Adjournment debate some months ago. If we could arrange some form of loans system with Hong Kong, we would see what we could do to co-operate in terms of students entering universities in this country.

Mr. Heffer: Is the Minister aware that if a loans system is introduced it will be one of the most retrograde steps to be taken in education? Is he aware that my own family is a good example of what can actually happen? My wife, who left school at the beginning of the war with seven passes and three distinctions, did not get to a university, whereas my brother-in-law, at the end of the war, managed to get to a university because of the grants system. Does the hon. Gentleman understand that thousands of ordinary working people will never have these opportunities if a loans system is introduced?

Dr. Boyson: I am glad to put the hon. Member's mind at rest. In this country at present, 23 per cent, of the intake to universities are children of blue-collar workers. In Sweden, where a loans system was introduced in 1964 by so-called social democrats—I know that those are dangerous words in this House—the percentage of children of blue-collar workers is 33 per cent, and rising, and the number in higher education has trebled since 1964.

16 to 19-year-olds

Dr. Mawhinney: asked the Secretary of State for Education and Science if he will make a statement on the education of 16 to 19-year-olds in the light of the publication of his Department's report on this subject.

Mr. Dormand: asked the Secretary of State for Education and Science what discussions he proposes to have on the document "Education for 16 to 19-year-olds".

Mr. Gwilym Roberts: asked the Secretary of State for Education and Science what plans he has for reducing the role of the sixth form and transferring A-level courses to colleges of further education and other relevant establishments; and if he will make a statement.

Mr. Thornton: asked the Secretary of State for Education and Science whether he expects the recommendations recently published of the committee chaired by the hon. Member for Sutton and Cheam (Mr. Macfarlane) to lead to the phasing out of school sixth forms.

Mr. Mark Carlisle: I welcome this joint review, and am grateful to the elected members and officers of local education authorities who took part in it. I believe their work will greatly assist authorities as they consider the pattern of provision that is most suitable in the light of their particular circumstances. The group itself recognises that in some areas sixth forms will continue to be appropriate, although in others it may be right to develop sixth form and tertiary colleges. We will be discussing aspects of the review in the course of our normal consultations with the bodies concerned.

Dr. Mawhinney: I thank my right hon. and learned Friend for that reply. Can he assure the House that it is not the policy of his Department to encourage the disruption of perfectly good secondary schools by the removal of their sixth forms in order that sixth form colleges may be set up, perhaps only for the reason that they are administratively convenient?

Mr. Carlisle: I can assure my hon. Friend that that is not the Department's policy. The report itself made clear that it believed that there was a continuing role for sixth forms in certain schools.

Mr. Dormand: Will the Secretary of State make absolutely clear in all his discussions that the Government are prepared to contribute their share of resources to such fundamental changes? In particular, will he bear in mind the need to make adequate grants to 16-year-olds to stay on in full-time education? Is he aware that in the Northern region fewer pupils stay on because of the inadequacy of family finances and that, among other things, that is a terrible waste of talent?

Mr. Carlisle: The provision made by the Government is part of the general provision in this area. It must be looked at in contradistinction to the type of institution which it is right to have in a particular area. I cannot give any promise that we are considering educational maintenance allowances at the present time, because I do not believe that we are in a position to do so. I am, of course, aware that the participation rate in some areas of this country is still lower than we would wish.

Mr. Gwilym Roberts: Does not the right hon. and learned Gentleman agree that, as a general principle, the

adult atmosphere of a further education or technical college is a much healthier place for 16-plus education and that it would have the advantage of bringing people on academic courses together with people on non-academic courses? At the same time, it could save some of these colleges from the devasting attacks which the Government are making on the non-mandatory sector of education.

Mr. Carlisle: I do not accept the hon. Gentleman's blanket assertion that the atmosphere is necessarily far better.—[HON. MEMBERS: "Visit some of them".] I have been in various ones. I was about to say that opinion differs in various parts of the country. For what it is worth, my own impression is that those in the sixth form and tertiary colleges like such places. My impression is also that those in sixth forms of schools like those sixth forms.

Mr. Thornton: Will my right hon. and learned Friend acknowledge the concern which has been expressed by many parents and teachers about the possibility of sixth forms being abandoned in certain areas? Will he urge upon local education authorities the need for consultation within their areas before undertaking any such changes?

Mr. Carlisle: Certainly. I believe that there should be the widest consultation. Where there are effective viable sixth forms, I hope that local authorities will continue them. In other areas of the country, where the numbers have dropped greatly, it may be that a sixth form or tertiary college is the correct answer. I believe that the solution will be different in different parts of the country. What the House cannot ignore is the fact that over the next few years there will be substantial reductions in the number of pupils in that age group, which means that local authorities ought to review their provision.

Mr. Foster: Does the Secretary of State accept that there is widespread disappointment with those sections of the report which deal with vocational educational and training? Does he also accept that because of the large reductions in the youth service and further education, education authorities are unable to make the contribution to the youth opportunities programme which they should? Does he further accept that there is widespread frustration at his own Department's puny efforts in its discussions on the content of the youth opportunities programme?

Mr. Carlisle: The hon. Gentleman has gone off at a slight tangent. I accept that the document refers to vocational training, but it mainly looked at full-time education between the ages of 16 and 19. As to the youth service, I can only repeat what I said in answer to an earlier question. As far as relevant expenditure is concerned, we have assumed no reduction in the expenditure on the youth service next year as against the present year. I accept that in the end these matters are decided by local authorities and I realise that they are under pressure generally. I have never disputed that. However, at a time of high youth unemployment, the youth service is an important aspect of their work.

Mr. John Page: Is my right hon. and learned Friend aware that, on the few occasions when I wake up in the night with a terrible start, it is because I feel that he might be paying attention to trendy educationists? Before he makes any change in any traditional system, will he think retwice about changing from a very conservative attitude?

Mr. Carlisle: I am sorry to hear that my hon. Friend ever has need to think of me in the middle of the night.


In general terms, I agree with him. I do not believe that one should merely go along with the most recent fad. I was surprised to hear the hon. Member for Bedwellty (Mr. Kinnock) apparently recommending that all education at 16-plus should now be undertaken in tertiary colleges. I do not believe that that is the right answer. I believe that we should retain some of the sixth forms.

Mr. Armstrong: Does the Secretary of State recognise that his answers are somewhat complacent in view of the great urgency involved in this issue? The education of 16 to 19-year-olds is perhaps the most important issue in education today. Crucial decisions are now being made by local authorities throughout the country. Will he recognise that the provision of resources is vital, because right across the board children are now leaving school as a result of the economic circumstances of their parents and are unable to continue their education? This is an urgent matter.

Mr. Carlisle: Of course I realise that this is a vitally important area of education. Indeed, it was for that reason that the committee, to whose report we have referred, specifically urged local authorities to review their provision in order to ensure that as full a range of opportunities as possible should be accessible to all in each locality. I hope that they will do that as a matter of urgency.
I am afraid that I can give no promise at present of further resource provision in that area, other than that which has been assumed in Government plans for the coming year. However, contrary to what the right hon. Gentleman said, I believe that there are signs that in many areas of the country the participation rate beyond 16 is actually going up.

Mr. Nicholas Winterton: While regretting the discourtesy of the Department in failing to notify a Member of this House that his question was being linked to a much earlier one, may I ask my right hon. and learned Friend what credibility he places upon assurances given by a local education authority that under reorganisation full sixth form facilities would be provided at a new secondary school, when in the event the local education authority in question is liable to back track on that assurance, which was given to parents who had little chance to complain about this change in policy?

Mr. Carlisle: I think that I know the case to which my hon. Friend has referred. In the first place it is a matter for the county council concerned and not for my Department. I am sorry if he feels in any way insulted or offended by my Department. I would have thought that it was reasonable to link questions up to No. 20 and to assume that hon. Members who had tabled those questions would be present.

Mr. Kinnock: If the right hon. and learned Gentleman thinks that I said that tertiary colleges were the only acceptable form of post-16 education, he is either myopic or he has been in hibernation with his hon. Friend the Member for Harrow, West (Mr. Page). Is he not concerned that Britain continues to have a much lower proportion of young people aged between 16 and 19 in systematic full-time or part-time education than any other comparable economy or modem society? If he is exercised by that fact, does he not think it possible to have a significant extension of opportunities for these young people when he is cutting non-advanced education by £12 million more next year

and advanced further education by £25 million more, thereby further reducing the opportunities which currently exist?

Mr. Carlisle: Of course I am aware that the figures for full-time and part-time education in Britian for those beyond the age of 16 are lower than for any other European country. I am in contact with my right hon. Friend the Secretary of State for Employment about training opportunities for those beyond the age of 16. On the question of those in full-time education, it is important that we get rationality into the system which will provide the widest possible opportunities.

School meals

Mr. Flannery: asked the Secretary of State for Education and Science, further to his reply to the hon. Member for Birkenhead (Mr. Field), Official Report, 23 January, column 246, if the October school dinners survey is now available; what the figures are; and how they compare with a year previously.

Mr. Race: asked the Secretary of State for Education and Science, further to his reply to the hon. Member for Birkenhead (Mr. Field) on 23 January Official Report, column 246, if the October survey on school dinners is now available; and if he will make a statement.

Mr. Macfarlane: I refer the hon. Gentlemen to the reply given to my hon. Friend the Member for Streatham (Mr. Shelton) on 29 January.

Mr. Flannery: Does not the minister realise that the catastrophic drop in the uptake of school meals is bound to cause concern about the health of working-class children? Does the fact that the Minister did not intervene in the abandonment of school meals in State schools in Dorset and Lincolnshire imply that the Government want to get rid of school meals altogether? If that is not the case, will he make it clear this afternoon that he intends to take action to ensure that there is an increased uptake in school meals in State schools.

Mr. Macfarlane: I do not believe that the hon. Gentleman has read the press release issued by my Department shortly after I answered the question posed by my hon. Friend the Member for Streatham. There has not been a catastrophic decline in the provision of school meals. The Government believe in the importance of the school meals service. We are confident that local authorities can adapt to the changing requirements of youngsters in this day and age. It is clear that those local authorities which have adopted the principle of the cash cafeteria system have achieved an increase in take-up of meals. The trend during the past 10 or 15 years has been for a transfer from packed meals to cafeteria meals. The 17 authorities that have not yet introduced cash cafeteria systems must review their provisions.
The Education Act 1980 made it clear in section 22 that children of those in receipt of family income supplement or supplementary benefit were entitled to free school meals.

Mr. Race: Is the Minister saying that a fall of 1·3 million in those taking school meals is not catastrophic? What does he think about the Salvation Army soup kitchens, now operating in Lincolnshire, which feed


children at midday because they cannot obtain school meals because the reactionary Tory authority has abolished them?

Mr. Macfarlane: The hon. Gentleman's prejudice is taking hold of him and clouding his judgment. The survey undertaken by the Department of Education and Science in recent weeks acknowledged that in the summer term of 1980 there was an inevitable decline in the number of pupils staying on school premises to take either the traditional or the cash cafeteria meals. During the past 10 or 15 years—under successive Governments-—there has been a notable increase in the number of children bringing packed meals to schools. The present statistics are much the same as they were under the previous Labour Government.

Mr. Field: As the Minister's answer tells us that there has been a decline of about 25 per cent, in the number of children taking school dinners, and as he asserted to the House last November that he was confident that there would be no dramatic decline—his words—in the numbers taking school dinners as a result of the Government's increase in school dinner charges, would he now say what, for him, constitutes a catastrophic decline? Also—[HON. MEMBERS: "TOO long."] Also, as the increased charges hit hardest at the poorer families, will he report to the House what monitoring progress has been made by the Government on the nutritional effects of the loss of meals as a result of the increased charges?

Mr. Macfarlane: The hon. Gentleman asked a number of questions. I can tell him that two-thirds of local education authorities in England have adopted criteria for entitlement to free school meals that are more generous than the statutory minimum. I hope that that will encourage the hon. Gentleman. On the question of the nutritional element, my right hon. Friend the Secretary of State for Social Services proposes to monitor the effect of the new school meal arrangements. I understand that the design of that study has yet to be finalised.
The hon. Gentleman referred to the catastrophic decline in numbers taking school meals. That is not the case. I am confident that local authorities have the capacity to monitor the effects of the changes in the school premises, and also the social services aspects. The hon. Gentleman must understand that savings must be made on the school meals service in order to preserve the core of our educational service.

Burnham Primary and Secondary Committee

Mr. Hawksley: asked the Secretary of State for Education and Science whether the Professional Association of Teachers will now have a seat on each local authority teachers' negotiating committee.

Dr. Boyson: It has always been open to local authorities to choose for themselves whom they should consult; but I am sure that local authorities generally will take note of the admission of this association, by my right hon. and learned Friend, to the Burnham Primary and Secondary Committee.

Mr. Hawksley: I congratulate my hon. Friend on including the Professional Association of Teachers in Burnham. Will he go further and send a circular recommending local authorities to include that body in all local negotiations?

Dr. Boyson: It has not been the Department's practice to send circulars suggesting to local authorities—which treasure their liberty—whom they should see. I am sure that they are aware that the PAT is now represented on Burnham, and will draw their conclusions from that.

Oral Answers to Questions — Prime Minister

Engagements

Ql. Mr. Ancram: asked the Prime Minister if she will list her official engagements for Tuesday 10 February.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Ancram: Will my right hon. Friend find time today to study the Employment Act 1980, with reference to the case of Joanna Harris? Is she aware that many on the Conservative side of the House believe that a person's right to work should not depend on union membership, and that in such circumstances a closed shop is a denial of free choice?

The Prime Minister: I agree with my hon. Friend about the operation of closed shops. I hope that those affected by it will take full advantage of the change in the law provided by the Employment Act 1980. As my hon. Friend will have seen from the Green Paper on trade union immunities, we are reviewing the law and will consider what action to take in the light of the Sandwell cases and other instances of its operation.

Mr. Foot: Has the Prime Minister had the chance today to study what we consider to be the extremely serious matters arising on the agenda of discussions between the National Coal Board and the National Union of Mineworkers? Does she not think that it is utterly deplorable, at a time of world crisis in energy, that Britain should contemplate closing pits that still have coal in them? How does she square that with the undertakings given by herself and the Government at the Venice meeting a few months ago?

The Prime Minister: That is a matter for the National Coal Board to consider in the light of its duties, its coal stocks, its requirements, its productivity, and the prices that it charges. We have already fixed the external finance limit for the NCB for next year at the considerable sum of £882 million.

Mr. Foot: Will the right hon. Lady reconsider her answer? This is a matter for the nation to consider. Will she give an undertaking that no steps will be taken along that road until the House has had an opportunity to discuss the matter? Will she not reinstitute the tripartite system of discussions for the coal industry, which produced "Plan For Coal"—which the Government said they would carry forward for a period? Does she not agree that it would be better for industry and for the country as a whole if an agreement were reached between the NCB, the miners and the Government about a plan for the industry, rather than the right hon. Lady condemning it to the disaster of quarrels between all three?

The Prime Minister: It would be quite wrong for the Government to attempt to manage every nationalised


industry. It is for the Government, in conjunction with the NCB, to fix the amount of finance that is available. We have done so, and the figure I gave to the right hon. Gentleman is considerable. That money will have to be found either from taxation or from borrowing, and will go to the NCB for its operations next year. That is in addition to the price that we shall pay for coal and the increased price that we shall pay for electricity because the price of coal is high.

Mr. Foot: Since the future of the nation is involved in this matter and since we shall never recover from the recession if the right hon. Lady and her friends allow the coal industry to sink, may we have an absolute undertaking that all the proposals will be discussed in the House of Commons before the procedure under which she is directing that industry proceeds?

The Prime Minister: No, Mr. Speaker. I am not directing that industry. We have fixed the amount available for the industry. It is for the management of the National Coal Board to make the arrangements and we shall stand by those arrangements.

Mr. Lennox-Boyd: Although my right hon. Friend does not wish to direct any industry, does she agree that Great Britain is famous for its red telephone boxes? Does she accept that British Telecom's announcement that they are to be repainted because, in the words of its spokesman, "yellow is its colour", will be treated with the greatest possible dismay?

The Prime Minister: I see my hon. Friend's point. I think that we are famous for one or two things other than red telephone boxes.

Mr. Sever: Will the Prime Minister call to her office the Secretary of State for the Environment to tell him of the widespread concern about the statement that he made in the House yesterday about funding the inner city programmes? Will she tell him that the statement was not good enough and that hon. Members representing inner city areas are worried about the desperate need to improve our inner cities? Will she ask him to come back to the House with a new statement indicating new proposals?

The Prime Minister: I cannot offer the hon. Gentleman any hope that more money will be made available for the inner city programmes. We are operating under considerable constraints. Whatever one wishes to do, one cannot go on borrowing more and more for causes, however worthwhile they are.

Mr. Hannam: asked the Prime Minister if she will list her official engagements for Tuesday 10 February.

The Prime Minister: I refer my hon. Friend to the reply which I have just given.

Mr. Hannam: Is my right hon. Friend aware of the growing resentment at the prospective increases in the water rate? Will she confirm that the Secretary of State has the power to dismiss as well as to appoint the chairmen of water authorities and that chairmen will be chosen because of their determination to reduce bureaucracy and cut costs?

The Prime Minister: We are aware of the widespread concern about water charges. My right hon. Friend the Minister for Local Government and Environmental Services has therefore seen the chairmen of the English water authorities. With their co-operation he has appointed

a team of financial consultants to inquire into the scope for reducing water charges from their present levels and to advise him accordingly.

Mr. Winnick: Is it not strange that people who always profess loyalty to Britain should now threaten to take up arms against this country? Is the right hon. Lady aware that a large majority of people in Britain want to see a lasting solution to the troubles in Ireland and, moreover, a solution which is based on the reality of the situation that exists in the whole of Ireland?

The Prime Minister: The situation with regard to Northern Ireland has not changed and will not change unless the people of Northern Ireland themselves wish to change it and unless the Parliament here so decides. Until that time, it remains exactly as it is.

Mr. Archie Hamilton: Will my right hon. Friend find time to study the statistics which show that one in four subscribers to BUPA are trade unionists? Does she agree that when it comes to making provision for the health of oneself and one's family it is better to be independent of the State than dependent on it?

The Prime Minister: I noted the figures. I am glad that an increasing number of people are choosing to spend their money freely on increasing provision for their health.

Mr. Alton: Is the right hon. Lady aware of the devastating consequences that the 1,500 redundancies at the Tate and Lyle sugar refinery in Liverpool will have on the economic and social infrastructure of that city? Has she received requests from the city council and from the spiritual and political leaders in Liverpool for a meeting with her to discuss the implications of that closure? Is she prepared to meet such delegates?

The Prime Minister: We have received some representations. I cannot receive such deputations. They should see management representatives. The hon. Gentleman knows how the problem arose. First, there has been a reduction in sugar consumption. Secondly, an increasing amount of sugar is refined from sugar beet.

Tel Aviv

Q.3. Mr. Renton: asked the Prime Minister whether she has any plans to visit Tel Aviv.

The Prime Minister: I have at present no plans to do so.

Mr. Renton: When my right hon. Friend visits Washington at the end of the month will she discuss with President Reagan the great need for a settlement of the Palestinian question? To what extent does she feel that the Camp David concept of Palestinian autonomy within a framework to be determined by Egypt, Israel and, ultimately, Jordan is still valid?

The Prime Minister: When we go to the United States we shall undoubtedly discuss this matter with President Reagan. I believe that Camp David was a great step forward. I have no doubt that the President of the United States will be considering how to take it further. One of the problems is that the concept of autonomy has so far been rejected by Jordan and the other Arab leaders.

Mr. Hooley: If the Prime Minister goes to Tel Aviv will she go to the West Bank and talk to the Palestinians


there where she will discover that they are determined to secure the right of self-determination in their own independent State?

The Prime Minister: We issued a declaration from Venice on this matter. If there is to be a settlement of the great problems in that area it is vital that one side should honour the right of Israel to live behind secure borders and in peace and that the other side should honour the legitimate rights of the Palestinian people. The problem has been to move those two essentials forward together.

Viscount Cranborne: Will my right hon. Friend confirm that she recognises Israel's right to exist and that the Palestinian Liberation Organisation is still dedicated to the destruction of the Israeli State?

The Prime Minister: Of course we recognise Israel's right to exist and behind secure boundaries. We have never recognised the PLO as the sole representative of the Palestinian people because of its relationship with terrorist activities.

Mr. Ernie Ross: If the Prime Minister goes to Tel Aviv will she stress to the Israelis that they cannot expect to live behind any type of secure border when they continue to seize land as they did recently when they seized 4,000 acres around the Arab town of Nablus?

The Prime Minister: That illustrates the importance of trying to secure an agreement on this long-standing problem. I do not think that it helps to hurl accusations at one side or the other. We must try to move both sides forward, recognising the two concepts that I indicated earlier.

Common Agricultural Policy

Mr. Latham: asked the Prime Minister what further proposals she will make at the next European Council to implement the Government's intentions regarding reform of the common agricultural policy of the European Economic Community; and whether she will make a statement.

The Prime Minister: It is too early to say what will be on the agenda for this meeting or what stage will by then have been reached in negotiations on farm prices and related matters.

Mr. Latham: Will my right hon. Friend ensure that the Government put as much determination behind refroming

the CAP as they did behind the successful renegotiation of the budget contribution? Does she agree that it is plain that the present system cannot continue for much longer?

The Prime Minister: I assure my hon. Friend that we shall devote all our vigour to reforming the common agricultural policy. It seems to us to be absurd to have a policy which builds ever-increasing surpluses which take ever-increasing proportions of the budget and of resources to produce food that we do not want and cannot eat.

Mr. Arthur Lewis: Is the Prime Minister aware that we are honoured with a visit of a delegation from the People's Republic of China? It is not a laughing matter. Although I am not allowed to draw the attention of the Prime Minister to the fact that they have not been in the Gallery, would she perhaps consider whether she could arrange a visit to China as soon as possible?

Mr. Speaker: Order. This was not an open question, but one of the questions on the Common Market.

Mr. Budgen: When my right hon. Friend goes to the European Council, will she take the opportunity to comment upon the interesting letter in The Times today by our distinguished colleague, Sir Fred Catherwood? In that letter he asserts, first, that the Euro-junkets such as we have read about recently are necessary and should continue. Secondly, he asserts that the EEC has a trade policy independent of the nation States within the EEC.

The Prime Minister: I cannot vouch for precisely what the letter in The Times says, but, if the sums which were reported as spent on overseas travel visits by Euro Members of Parliament were correct, it was gross extravagance.

BILL PRESENTED

FREEDOM OF ASSOCIATION

Mr. Den Dover, supported by Mrs. Peggy Fenner, Mrs. Sheila Faith, Mr. Ivor Stanbrook, Mr. Robert Dunn, Mr. Bowen Wells, Mr. John Wheeler, Mr. Barry Porter, Mr. Tim Eggar, Mr. Christopher Murphy, Mr. John Carlisle and Mr. Michael Colvin presented a Bill to provide the freedom to belong or not to belong to a trade union: And the same was read the First time; and ordered to be read a Second time upon Friday 27 February and to be printed. [Bill 63].

Coal Industry

Mr. Dennis Skinner: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
The threatened closure of coal mines.
I have just come back from the National Coal Board; I was not chucked out. I have not had an opportunity to raise the matter with you, Mr. Speaker, because I dashed straight in from Hobart House.
The matter is serious, because 30,000 miners are being thrown on the scrap heap. It is important, because of what I said about the miners and because we could be witnessing another period of a pit closure programme from which we cannot escape, because pits, like so many factories—but not all—are unable to be reopened. It is important that we raise this matter at an early stage, because of what the Prime Minister said today in response to my right hon. Friend the Leader of the Opposition, when she implied that the closure programme had nothing to do with the Government. I have a statement from the board—not from the union—which says that it is as a result of the run-down of the economy that between 8 million and 10 million tons of coal must be—[HON. MEMBERS: "TOO long."]

Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) is entitled to raise this matter. I should have taken it before the notice of motion, but the hon. Gentleman had not given me notice. Therefore, I was not to know what matter he would raise. However, he must not make the speech that he would have made if I had granted the application. He must confine his arguments to saying why the matter is urgent, important and necessary.

Mr. Skinner: I shall forgive you, Mr. Speaker.
The matter is urgent, because, as a result of the joint discussions this morning, arising from the executive meeting on Thursday of the NUM and other affiliated bodies, it is likely that a joint meeting with the Department of Energy and perhaps also the Prime Minister will be requested. It would fall into line with what my right hon. Friend said during questions, namely, that the House should discuss this matter before talks are considered.
The matter is also important, because, if we are to ensure the future of the coal industry, it is necessary to put a curb on the ever-growing total of imports under the auspices of the Government. They have risen by as much as three times since the last year of the Labour Government. They need to be reduced, and urgent measures must be taken.
The matter is urgent, because the coal industry, unlike many others that have fallen foul of the Government, has been increasing its productivity faster than any other. It is in line with Government policy. If we are to ensure that Government policy is to be kept intact, why should an industry that has managed to increase its productivity be thrown on to the scrap heap like the rest of them as a result of the general run-down in industry?
The issue is very important. The miners' unions and other unions—not merely in some of the so-called militant areas but throughout the coal fields—have said that they will not stand for this closure programme. Therefore, it is essential that we give the matter priority for a debate at the earliest opportunity.

Mr. Speaker: The hon. Member seeks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
The threatened closure of coal mines.
As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Order but to give no reason for my decision. I listened carefully to the hon. Gentleman and to the representations that he made, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Mr. Skinner: But I can try again.

EUROPEAN COMMUNITY DOCUMENTS

Ordered,

That European Community Document No. 4049/80, concerning the harmonisation of income tax provisions with respect to freedom of movement for workers within the Community, be referred to a Standing Committee on European Community Documents.—[Mr. Pym.]

Muscular Dystrophy

Mr. Allen Adams: I beg to move, That leave be given to bring in a Bill to put a statutory obligation on health boards to set aside a proportion of their existing resources for research into the causes and effect of muscular dystrophy or to fund any research project approved by the Secretary of State into the causes and effect of muscular dystrophy.
The Bill is in no way a party political issue. I have drawn support for it from all political parties in the House, with the exception of the Liberal Party because I could not find any of its members.
As the title suggests, the Bill is exclusively about muscular dystrophy. It would perhaps be appropriate at the outset to ask ourselves two questions—what is muscular dystrophy, and what can we do about it?
I shall briefly explain in layman's terms what muscular dystrophy is. Unlike motor neuron disease, or multiple sclerosis, with which it is generally confused, it is essentially a disease of the muscle. It does not affect the nervous system. We must make that distinction. The muscle wastes away quickly. The disease is exclusively carried by females and is passed on exclusively to male children.
It is a cruel disease. It is not necessarily apparent at birth. I know of many children who seemed to be normal at birth and in whom the disease did not become manifest until they were 5, 6 or even 8 years old. However, although the disease is not apparent at birth, it can be detected at birth by a simple procedure, which is in use in Japan, Germany and to some extent France. It is not used in maternity units in this country. Perhaps our maternity units could consider that process. Detection at birth is vital.
The disease destroys half of a child's muscle by the age of 5. If the process is to be slowed down, detection at birth is vital. There is a medical wrangle over the suitability of one or two of the drugs, but certain drugs, if used from the age of 1 or 2 months until the child is 5, will undoubtedly slow down the process. However, by the time that the disease has manifested itself, generally at 5 or 6 years of age, it is too late even to slow its progress. I urge doctors to consider universal testing at birth.
I do not wish to exaggerate the size of the problem. The disease affects only one in 100,000 children. It does not occur more frequently in areas of deprivation, or in different parts of the world. It affects all strata of society and all parts of the globe equally.
If the disease is allowed to take its course, an affected child is in a wheelchair by the age of 8. As the muscles weaken and are destroyed, the child's body becomes progressively distorted. The child never leaves his

wheelchair. Death normally follows between the ages of 15 and 20 years. A few struggle on into their late twenties or early thirties.
Any one of us can suffer from cancer or be struck down by heart, liver or kidney disease. We do not know whether such diseases will kill us next week, next year, or in three years' time. Muscular dystrophy kills, with certainty. No one survives. That is its unique feature. Not only does it kill; it destroys a child's ability to enjoy childhood. He cannot use his legs or arms.
Society has done little to combat the disease. Dr. Thomson, of Knightswood hospital, in Glasgow, has had to work in a cupboard for the past 20 years. His annual grant is £22,000. Out of that he has to find his salary and that of his assistant, and the money to maintain his equipment. He has come upon a drug called Allopurinol. It is not claimed to be a miracle cure, but it appears to slow down muscular wastage and to maintain mobility for an extra two or three years. Such a horrible and cruel disease is worthy of the expenditure of more than £22,000 a year. We have perhaps seen the first chink of light, but more research needs to be done.
I have a list of people who claim that they get money for research into muscular dystrophy. The Southern general hospital in Glasgow gets £43,000; Edinburgh gets £40,000; and St. Andrew's gets £5,000. However, their research is not specifically into muscular dystrophy. A great deal of the money goes towards other research, albeit necessary research.
The Bill aims to give the Minister powers to tell health authorities—perhaps the wording is slightly wrong—to set aside a specific part of their budgets for research solely into muscular dystrophy. I repeat that it is one of the cruellest diseases that we know.
We all know what Ten-Minute Bills are for. Their purpose is essentially to draw attention to a specific subject. I hope that when the Bill has a Second Reading, Government Whips and the Front Bench will go to the toilet or to the pub—I hope that they will disappear—so that we can examine the problem in detail, as in Committee.

Question put and agreed to.

Bill ordered to be brought in by Mr. Allen Adams, Mr. Harry Greenway, Mr. John Maxton, Mr. Ernie Ross, Mr. William McKelvey, Mr. Harry Ewing, Mr. Raymond Ellis, Mr. John MacKay, Mr. Dick Douglas, Mr. Frank McElhone, and Mr. Donald Stewart.

Mr. Allen Adams accordingly presented a Bill to put a statutory obligation on health boards to set aside a proportion of their existing resources for research into the causes and effect of mucular dystrophy or to fund any research project approved by the Secretary of State into the causes and effect of muscular dystrophy: And the same was read the First time; and ordered to be read a Second time upon Friday 20 February and to be printed [Bill 64].

Orders of the Day — Atomic Energy (Miscellaneous Provisions) Bill

Order for Second Reading read.

The Under-Secretary of State for Energy (Mr. Norman Lamont): I beg to move, That the Bill be now read a Second time.
The main purpose of the Bill is to enable the disposal of shares in the Radiochemical Centre Ltd. This is a small company, usually known as TRC, which makes radioactive isotopes for industry, medicine and research. The Bill clarifies the present powers of the Government to dispose of shares held in companies operating in the field of atomic energy in general and clarifies the present powers of the United Kingdom Atomic Energy Authority to dispose of shares in any company. In particular, it will enable the sale of up to 100 per cent of the shares in TRC. I emphasise that TRC is not a company operating in the field of nuclear power. For historical reasons, which I shall explain, it is a company owned by the Atomic Energy Authority.
Before turning to why the Government consider that shares in TRC should be sold, I should like to give the House the background and history of the company. It is a remarkable company, although it is not well known.
The origins of the company go back as far as 1940, when the Government invited a small company called Thorium Ltd to undertake the refining of radium and the manufacture of radium-based self-luminous paint for use in compasses and aircraft instruments. The company started in a small house in Amersham. Much of the early drive came from a young chemist, Dr Grove, an entrepreneur who had the ideas and vision to see the future uses for radio-isotopes and who was to lead the organisation as it grew for some 40 years. From those first modest steps in a house in Amersham grew a company that today is a world leader in its field and is internationally associated with the manufacture of radioactive substances.
Thorium Ltd. initially acted as managing agents for the Government but relinquished that agency in 1946 when the Radiochemical Centre was established within the public sector. Its immediate purpose was concerned with natural radio-elements, but it was also envisaged that, when artificial radio-isotopes became available, the centre would undertake the processing and distribution of them as well.
Although radium and its associated products dominated the work at Amersham until well into the 1950s, artificially produced radio-isotopes became more important as Pharmaceuticals and research chemicals incorporating these materials were developed and manufactured. During this period, the Radiochemical Centre continued to expand.
In 1954, the centre became part of the newly formed United Kingdom Atomic Energy Authority, whose primary purpose was to carry out research and development in atomic energy. TRC has undoubtedly benefited from the growth in general scientific knowledge as a result of research into atomic energy, although—this

is a point that should be emphasised in case there is any doubt—the products that TRC produces are not directly relevant to the nuclear power programme.
The Radiochemical Centre took over the functions of the isotope division of the Atomic Energy Research Establishment at Harwell in 1959 and continued to develop its sales. By 1959, sales exceeded £1 million per annum, with over 60 per cent. going overseas to some 50 countries.
The 1960s were a period of further vigorous expansion. New laboratories were built to enable the manufacture of more radiation sources. The export business continued to prosper. The centre received the first of four Queen's Awards for Exports in 1967.
This part of the Atomic Energy Authority's business—the manufacture of radioactive substances used for diagnosis and treatment in medicine—was transferred to a wholly owned subsidiary company, known as the Radiochemical Centre Ltd., by the Atomic Energy Authority Act 1971. When this company was set up in 1971 it was originally envisaged that there should be a private shareholding in the future. When the incorporation was made, the purpose was to see the centre develop as an independently run company and to encourage proper commercial and financial disciplines.

Mr. Tam Dalyell: The Minister used the words "it was envisaged". Envisaged by whom?

Mr. Lamont: It was envisaged by the Conservative Government who introduced the Act in 1971. I am coming to the view taken by an earlier Labour Administration. I am at the moment dealing with the view of the Government in 1971.
Since then, when TRC was set up as a company, it has continued to trade profitably and to expand. It decided in 1973 to open a new green field manufacturing site at Cardiff. Work on this is almost complete and production has already started. The Cardiff plant is planned to be in operation in 1981. Recent capital investments have cost the company some £20 million and will enable it to double its manufacturing capabilities.
Without doubt, TRC has developed into a commercial and manufacturing organisation with a worldwide business and a world-wide reputation. It employs some 2,000 people. Its main markets are in medicine, research and industry. It manufactures radioactive drugs for diagnostic purposes, ranging from biological research to engineering and advanced electronics. In the field of industrial radiation, the company produces sources for industrial radiography, with applications in industry—for example, the examination of pipeline welds.
TRC is a world leader in its field. About 80 per cent. of its sales revenue comes from abroad, an astonishing achievement. In research radiochemicals, it has captured about 80 per cent. of the United Kingdom market, some 30 per cent. of the United States market and roughly 30 per cent. of the Japanese market. This has been achieved by a dynamic management and dedicated work force in the face of tough, international competition.
I hope that this has given the House some idea of the nature of the company. I should now like to explain why it is the Government's view that shares in the company should be sold.
The proposal that private capital should be introduced into the company is not a new idea. When TRC was


constituted as a limited company in 1971, the then Government stated that they favoured eventual private participation. This would also appear to have been the view in 1970 of the Labour Administration, which introduced a Bill similar to that which became the 1971 Act, which lapsed with the general election that year. At the time of the 1971 Act it was the intention that the Government and the authority between them would retain a majority shareholding, and this was provided for in the Act.
Early in 1974 the then Conservative Government reaffirmed their intention to sell shares in TRC but deferred any such sale until after the introduction of an improved system of product costing and accounts based upon it. Nothing further has been done since then, and all the shares are still held by the Atomic Energy Authority.
The present proposal to sell shares in TRC is in accordance with the Government's policy of introducing private capital into public sector companies and, in view of the previous proposals, coupled with TRC's outstanding record as a successful commercial operation, TRC is plainly an excellent candidate for privatisation.
The Government have avoided intervention in the day-to-day running of the company and have never provided subsidies. Indeed, its only link with the public sector is the fact that its shares are held by the AEA, and this is now an anachronism.

Mr. Arthur Palmer: The hon. Gentleman has explained the great merits and success of this company. What benefit does he think that the introduction of private shareholding will confer on it?

Mr. Lamont: There are no reasons why this company should remain in the public sector. The company can only benefit from having total freedom from Government intervention. The hon. Gentleman will perhaps at least see this point. The time taken up by management and by civil servants reviewing the investment plans, the pay plans and the corporate plan of the company is valuable time given by people who have other things to do. There is every reason why this company should be available for investment by the private sector. We believe that this company can benefit through being fully integrated into the private sector. The company's board has been consulted and agrees with the principle of disposing of shares in TRC.
The proceeds of disposal of shares in the company, less the administrative costs of making the disposal, will be paid into the Consolidated Fund. This is in accordance with one of the Government's other objectives from privatisation—this, too, answers the hon. Gentleman's question—to reduce the size of the public sector borrowing requirement. The reasons for privatisation are, therefore, twofold: to reduce public involvement in a company which will benefit from full commercial freedom, and to lower the Government's need to borrow money.

Mr. Edward Rowlands: Is the Minister saying that the board and the staff agree with the power to be taken under the Bill to dispose of more than 49 per cent. of the shares?

Mr. Lamont: The board thinks that the Government should retain some holding in the company. I have not said anything that is contrary to that. The board also thinks that it is right that there should be sales by the Government of shares in the company. It welcomes that.
I should now like to explain in more detail the provisions of the Bill and why it is necessary. When the company was set up in 1971 it was envisaged that a minority shareholding would be sold off at some time. As a result, the Act provided for a majority of the voting shares in the company to be retained in the public sector. The Government now wish to have the option of selling more than half the shares, and so the Bill removes the provision in section 11(3) of the 1971 Act, which requires that the Secretary of State and the authority between them should hold at least 50 per cent. of the voting shares.
At the time of the 1971 Act it was thought that, subject to this provision, the Secretary of State or the authority could dispose of any shares owned by them. However, the Government have been recently advised that these general powers of disposal are constrained in respect of sales of shares by the Secretary of State in companies operating in atomic energy by reference to his general duties to promote and control the development of atomic energy, and constrained in respect of sales of shares made by the authority in any company by its ability to do only such things as are in accordance with its statutory functions.
Arguments could therefore be advanced that the disposal of part or all of any of the AEA's existing shareholdings would be inconsistent with existing powers, and any such disposal might therefore be challenged in the courts. For this reason, it is essential, if this disposal is to take place—even this sale of shares amounting to less than 50 per cent.—that the general powers of the Secretary of State and the authority be clarified in the case of TRC.
It seems sensible to take the opportunity similarly to clarify the present position of the other two companies in which the AEA holds shares—British Nuclear Fuels Ltd. and the National Nuclear Corporation Ltd.—and any company that the Government or the authority may require in future. The Bill ensures that the Secretary of State has the power to sell any shares that he owns in companies operating in atomic energy, and that the authority has the power to sell shares in any company that it owns.
The Government and the authority have already the power to buy shares. It is surely right that they should have the freedom and power to sell shares as well as to buy them.
One present restriction on the sale of shares is on the sale of more than half of the voting shares in British Nuclear Fuels Ltd., which is specifically imposed by section 11(3) of the Atomic Energy Act 1971. I draw to the attention of the House the fact that the restriction is retained by the Bill. The Government want to have the option, which was previously thought to exist prior to legal advice, of selling up to 49 per cent. of the shares in British Nuclear Fuels Ltd., but I emphasise that at present the Government have no plans to do so. The Government are merely clarifying the powers that it was previously thought the Government had.
Similarly the option to sell shares in the National Nuclear Corporation Ltd. is being kept open, although at present the Government have no plans to make such sales. Should the Secretary of State or the authority acquire shares in other companies in future, they would likewise, as a result of the Bill, have the option to sell them, too.

Mr. Peter Rost: The Government now have only a minority holding in the National Nuclear Corporation Ltd. They do not have a majority holding as they have in British Nuclear Fuels Ltd.


If it were the Government's intention at some future date to reduce their holding, would it be their intention to reduce it to virtually nil or to retain a small holding?

Mr. Lamont: The Government have made no decision to dispose of their shares. My hon. Friend rightly says that the Government have only a minority holding. I believe that it is 35 per cent. at present. However, others have shares and there could be circumstances in which the shares held by others end up in the Government's hands. The potential provisions set out in the Bill are relevant to that. I emphasise that at this moment, at the beginning of the nuclear programme, the Government do not have plans to dispose either of the 35 per cent. holding or of other shares that might come their way. It is, of course, a matter that the Government could consider in future.

Mr. T. H. H. Skeet: Is my hon. Friend saying that in this Parliament he will not be disposing of any of the shares of companies other than those of the Radiochemical Centre?

Mr. Lamont: At present the Government have no plans to dispose of shares in BNFL. The Bill would allow the Government to do so up to 49 per cent. They have no plans at present to sell shares in the National Nuclear Corporation. As for the latter body, things might change. There is every reason to want to see a strong private sector construction industry building our stations. We must see how the programme develops. First, we must get it off the ground. We have no plans to sell shares at present. That is all that I am saying on that score. I am not going beyond that.

Mr. Edwin Wainwright: Is it the Government's intention to give to private enterprise any section of a nationalised industry that happens to be viable and to allow the parts of the nationalised industries that are almost impossible to make viable and profit-making to remain in the nationalised sector?

Mr. Lamont: It is the Government's firm policy to reduce the size of the public sector and wherever possible and practical to introduce private capital.

Mr. Peter Hardy: Mr. Peter Hardy (Rother Valley) rose—

Mr. Lamont: I must get on.
Apart from the provisions that I have mentioned, the Bill covers a few other matters. The requirement for TRC's account to be laid before Parliament is removed once more than half the voting shares are disposed of. Clause 2 makes it clearer than it is at present that, should the authority receive moneys from the sale of shares, the Secretary of State may direct them to be transferred to the Consolidated Fund. Clause 3 provides for the expenses associated with the disposal to be paid for out of sums provided by Parliament.
The Bill also allows for the sale of shares to be made either by the authority or by the Secretary of State. As I mentioned earlier, the shares are at present held by the authority. If the Government wished to sell the shares in TRC directly the Secretary of State would first use his powers under the 1971 Act to transfer to himself those shares which it was intended to sell. It would then sell the shares and the proceeds would be paid into the Consolidated Fund.
Alternatively, the Bill gives the Secretary of State the power to direct the authority to make the sale and then to transfer the proceeds into the Consolidated Fund. It has not yet been decided who will actually make the sale, but legislating in this way provides greater flexibility.
The Bill would enable a sale of up to 100 per cent. of the shares in TRC. The Government have not yet decided on the exact timing, the method, or the extent of the disposal, but it seems unlikely that a sale could take place before the end of this year at the very earliest. For the time being we wish to keep these options open.
There is one final and important matter that I wish to make clear. The Government have decided that employees at present with TRC may remain in the Atomic Energy Authority pension scheme in which they are now members.

Mr. Rowlands: Such generosity.

Mr. Lamont: That means that TRC and its employees will continue to make the appropriate contributions to the scheme in the normal way. Employees joining TRC after some agreed date in the future will join a new company scheme which is being set up.
I pay tribute to the employees of TRC, who, through their dedication and hard work, have enabled their company to be so successful and outstanding. I realise that there may be uncertainties about the disposal. However, I assure them that there are no grounds for such anxiety. The Government see TRC as a national asset and would not agree to plans that would endanger the company's future or the livelihood of those who work for it.

Mr. Peter Viggers: Does my hon. Friend agree that it would be possible under the joint stock company provisions to have stock options and share options which would enable individual employees in the company to benefit, which is not possible if the company remains parts of a nationalised industry?

Mr. Lamont: My hon. Friend makes an extremely important intervention. I am sure that he has referred to one of the attractions of privatisation for many people. When I met the trade unions at the Radiochemical Centre last week, that was one of the very issues that they raised. No decision has yet been made on whether the company will be privatised either by sale to a corporate buyer or through a flotation. A flotation enabling a share incentive scheme and profit-sharing schemes to be devised for the benefit of the work force is clearly a matter of importance. Further, even though Labour Members pooh-pooh it, the workers in TRC favour it.
As I said at the beginning, the primary purpose of the Bill is to enable the disposal of shares in TRC. It therefore takes further the Government's manifesto commitment to roll back the public sector. The Government see no benefit, either to the nation or to TRC, in the Government continuing to own all the company's shares. Indeed, I believe that it is right that such a high technology company, which is both profitable and rapidly expanding, should be allowed to develop in an atmosphere of the fullest commercial freedom. I am confident that the injection of private capital into this company will not only be in the national interest but will benefit management and workers alike. TRC has been successful over the years. The House should give it the means to build on that success in the future.

Mr. Edward Rowlands: On a day when a meeting of deep concern to the energy requirements of this nation is taking place, to bring forward such a petty and irrelevant Bill is a waste of legislative effort and time.
As the Minister said, the only really significant change that the Bill seeks to make concerns the power to sell off the whole of the Radiochemical Centre. I understand that the provisions governing BNFL do not change the position that we thought existed after the 1971 Act, and that the situation regarding BNFL and the role of the Government's majority shareholding will be fully maintained. So there is no fundamental change of policy in that respect. However, I should like to ask the Minister about some of the extraordinary wording of the Bill in relation to the general power that the Secretary of State is seeking.
The whole case for this two or three-clause Bill, this measly little Bill, rests entirely on the proposal to sell off completely the Radiochemical Centre. The power already exists for shares to be created in TRC. That is not in dispute. That power has existed since 1971. The only reasoned justification for the Bill is to give the Government power to sell off the whole of TRC. The power to create shares already exists, and, if it does not, we shall not dispute that part of the Bill that clarifies the matter. We are appalled with the rotten case presented by the Minister to justify taking the power to sell the whole or the majority of the shares in the centre.

Mr. Tim Eggar: Is not the hon. Gentleman aware that considerable doubt is cast on the provisions of the 1971 Act by the provisions of the 1946 and 1954 Atomic Energy Authority Acts? Should he not bear those Acts in mind?

Mr. Rowlands: I shall certainly bear them in mind, and I hope that we can reach a consensus before I finish my remarks. We support any part of the Bill that clarifies the position and role of the Atomic Energy Authority and the Government with regard to the sale of shares in this company. If that is the purpose of the Bill, we may be able to obtain a consensus.
The hon. Gentleman knows that the Bill gives the Secretary of State power to sell more than 50 per cent. of TRC if he so wishes.

Mr. Hardy: May I ask my hon. Friend to deal with the point on which the Minister would not give way a few moments ago? My hon. Friend mentioned that the Minister's explanation left a great deal to be desired. Will he pursue the point that the Minister's explanation gave no assurance with regard to the amount that the Government expected to receive for those shares? The Minister said that £20 million would be reinvested. We have a right to know whether that sum of money will be returned.

Mr. Rowlands: That is a pertinent point and I shall deal with it later. However, I should like to deal first with the point that was made about the need to clarify the position.
The problem that the Minister has had in presenting his case today is that the Government are so used to the claptrap about inefficient and badly managed State enterprises compared with the bright-eyed, sharp-eyed private sector, and this company did not fit any of those categories.

Grudgingly, the Minister had to admit that TRC had been a wonderful success story—a 100 per cent. Governmentowned success story. He could not say that TRC was losing money or that it had come cap-in-hand to the Government and had made demands on the taxpayer. He did not give the figures—

Mr. Norman Lamont: It is wrong to say that my description of the company's success was half-hearted. Over and over again I emphasised the great achievements of the company. In the light of that, will the hon. Gentleman say what he thinks would be gained by retaining this company in the public sector and, at a time of public expenditure restraint, why the money that is tied up in this company should be left there rather than be used for the other valuable purposes for which the hon. Gentleman is always campaigning from the Dispatch Box?

Mr. Rowlands: Because it is making money for the Government. The Minister did not give the figures, so I shall give them one by one.
First, since 1971 the turnover of this company has risen from £8 million to £50 million a year—not bad for a socalled nationalised concern. That turnover has been matched by excellent profits—£26 million in that period—and with an average return on group capital investment of 26 per cent. I should like to know how many other companies in the private sector have achieved such good figures.
I turn now to the question that the Minister asked. Why should the Government hold on to this valuable company and why should not the shares be sold? The dividend has been paid to the shareholders—the United Kingdom Atomic Energy Authority. In 1971–72, the dividend was 10 per cent.; in 1972–73, 10 per cent.; in 1973–74, 7 per cent.; in 1974–75, 11·49 per cent.; the same percentage the following year; in 1976–77, 8·2 per cent.; in 1977–78, 22 per cent.; in 1978–79, 12 per cent.; and in 1979–80, 12 per cent. The company is doing very well for the taxpayer and the State. It has been making profits and paying good dividends to the Government.
Has the company made any demands on the public sector borrowing requirement besides being artificially a part of the PSBR? I should be grateful if the Minister would give the figures with regard to the significance of TRC being a part of the public sector and its impact on the PSBR. Has the company made large demands on the Government for its capital investment programme? Besides the initial capital investment of £6 million, which is now extremely profitable to the Government, has it made a huge demand on the public sector borrowing requirement to finance the large-scale £20 million exciting investment at the Cardiff factory? It has not done that. It raised most of it from its profits on its own reinvestment, along with some support from the Government in the form of equity, for which now the Government are receiving a very healthy return.
So the company is not making any demand. In the large scale expansion programme that this company has undertaken it has made marginal, insignificant demands on the public sector borrowing requirement, for which the Government will get a very high and valuable return in the coming years, unless they go through this foolish act of selling the company off to the private sector at the moment of major growth and expansion by TRC.

Mr. John Watson: I am sure that the hon. Member does not wish to mislead the House. Does he acknowledge that the £6 million profit figure to which he referred relates to 1979, that last year the profit figure was £4 million, and that this year it is likely to be distinctly lower than £4 million?

Mr. Rowlands: I am sorry that the hon. Member is leading with his chin on this matter. The reason why it will be distinctly lower than the £6 million is that, as the Minister pointed out, 84 per cent. of TRC's products are exported, 30 per cent. going to the United States. The high interest rates and particularly the high exchange rate have some effect on the growth of profits of the company. That is the reason. Volume has risen, but the margin has become slighter because of the Government's policy towards exchange rates. I am sorry to report to the hon. Gentleman that the Government's general economic policy has been the chief cause for the slight dip in profits.
I think that anyone who knows about this matter and anyone who has looked particularly at the Cardiff venture—I had the privilege of visiting it, as I shall mention again shortly—will say that the potential now for both expansion and profits is very considerable, as a result of the tremendous initial £20 million investment. If it was partly financed by the Government, they had a happy opportunity for handsome return on such investment.
For the last six years the Government have received a 12 per cent. dividend return on their investment, which we hope will pay the marginal costs of the so-called management review and the corporate plans. It has been such a successful company that it should take about five minutes to survey and to study. In return for that, the Government have had a very large return on their investment.
The next reason that the Minister gives as a case for selling off TRC is that we need private capital to be injected into the company for future expansion programmes, instead of the company having at some time in the future to come cap-in-hand to the Government. As the Minister admitted, already the £20 million investment programme has almost doubled the company's capacity to expand. That is already in place and has been financed. Therefore, we cannot expect a demand of any kind to be made on the Government until the late 1980s for any further expansion.
Anyway, the power exists without the Bill for the Government to allow the injection of private capital into TRC. No one is arguing against that. It will not be the Opposition's case that there is not a case for shares or capital from the private sector to go into TRC. What we are saying is that we do not need the Bill to do it, except in the clarifying sense, and, secondly, that we are opposed most bitterly to the idea of the majority, if not the whole, of the company being sold.

Mr. Norman Lamont: Why does the hon. Gentleman think that it is a good idea for private shares to be taken in TRC?

Mr. Rowlands: I do not particularly think that there is a good case for that. [Hon Members: "Oh."] What I am saying is that the opportunity has existed since 1971. The Labour Government of 1974–1979 did not remove that opportunity. It can be taken up at any time, if it is judicious and sensible commercially or technologically so to do.
I do not think that at present there is any need for such privatisation or the introduction of private capital. But if the Government want to say "What we need is some worker shareholding", they can do so without the Bill. The Minister knows that.

Mr. Lamont: Mr. Lamont indicated dissent.

Mr. Rowlands: The Minister shakes his head. He admits that this could be done without the Bill.

Mr. Lamont: Mr. Lamont indicated dissent.

Mr. Rowlands: We shall discover further, when the winding-up speech is made, what is preventing worker shareholdings as part and parcel of TRC without the power to take more than 50 per cent. of the shares and sell off the company.
The Minister was very disingenuous about the company's position and that of its staff and workers and their attitude towards the Bill. He said that he had visited them in Amersham. He said that the point that they raised with him was that they wanted some shares in the company. However, that was not the only topic which they raised with him, and it was not the main one. So why did he not tell the House about the main point raised by these dedicated staff, to whom he paid a great compliment, and the dedicated management, who have made such a commercial and technological success of this company, although it is 100 per cent. Government-owned? Why did the Minister not state is the position of TRC staff and workers?
The Minister will know—I do not think that last Friday he found anything different—that their statement made last month expresses the position by which they stood last Friday and stand today. That statement says:
We believe that the Government should retain a controlling interest in the Radiochemical Centre.
That is a statement of the wishes and feelings of the overwhelming majority of the staff and workpeople at TRC. Why did not the Minister tell that to the House? Why did he just say "Of course, one point that was raised with me was that they would like some worker shareholding of some kind"? That is because it conflicts with all the grand compliments that he has been paying to the company, and he knows that the action that he is proposing to take as a result of the Bill, would conflict with the wishes and feelings of the overwhelming majority of the staff and workers at TRC.

Mr. Rost: Will the hon. Gentleman give way?

Mr. Rowlands: I shall not give way. I have done so a number of times. I want to deploy one or two other arguments. The hon. Gentleman can make his own speech. He will have plenty of time to make his comment. We shall be here for a couple of hours at least.
The Bill is about the power to sell off a company which has commercially and technologically kept more than one step ahead of its competitors in the game. It has made a great deal of money. It has invested very well. It is capable of making even more money as a 100 per cent. Government-owned company, or as a Governmentcontrolled company. Its industrial relations have been marred by only one half day's marginal dispute since 1944. In its industrial relations and its terms and conditions of service it has skilfully blended the best of the Civil Service arrangements with those of industry in the negotiations that have been taking place and evolving over the last year or two.
As the Minister admitted, I think, there is an intense and very special commitment to the company by its staff and workpeople. In the brief time that I have spent at the new Cardiff premises, I found that to be a very striking feeling and wish. There is a sense of commitment and of special relationship and identification with the company, which has grown out of its success.
Why impair that? Why even cast doubt on it? Why create any uncertainty about it, as the Bill and its powers could do? Why cast doubt on a very successful ongoing operation? Why create the degree of uncertainty that can flow and is strongly felt by many members of the staff about the possibility of being taken over by some unknown company or organisation, when it is already a remarkably successful outfit, with a marvellously dedicated staff, and is doing extremely well?
There is not a shred of evidence—the Minister brought none to the Dispatch Box today—to suggest that the structure of the company over the last eight or nine years since 1971, the organisation of the company, how it has been managed or how it is owned, have in any way inhibited the growth and development of the company. The Minister cannot produce such evidence, because the figures speak for themselves. There has been no demand from the management for this change. There has been no demand for the Bill from the staff or the workpeople.
If there is a case for this change, where does it lie? In the end, the Minister gave the two reasons: first, party dogma and doctrine; secondly, the public sector borrowing requirement. Let us look at these two so-called reasons for casting doubt on certainty and creating uncertainty and doubts that need not exist about the continuation and development of this very successful company.
Let us look at the public sector borrowing requirement consideration. As has been said, the Bill's main purpose is to enable the Government to realise the assets that they hold in the Radiochemical Centre and to reduce the public sector borrowing requirement. By how much will the public sector borrowing requirement be reduced? How is it to be reduced, and on what time scale? The Minister may say that the Government have taken the option and that they will think about the time later. What evaluation or assessment have the Government made?
If the Bill represents a major item in the Government's policy of reducing the public sector borrowing requirement, the Government should tell us how much money is involved. Is it £50 million? Is it £100 million? This year the public sector borrowing requirement amounts to £12·5 billion. Can it be true that the Government want to create uncertainty and want to cast doubt on the development and continuing success of a company just so that they can knock £50 million to £75 million off the public sector borrowing requirement? That is peanuts in public sector borrowing requirement terms.
The problems and uncertainties that the Bill will create will be far greater than any impact it might have on the public sector borrowing requirement. However, if that is the Government's case, the Minister should tell us what estimate the Government have made for the reduction in the public sector borrowing requirement during the next 12 months or so.
There is a more dangerous and worrying aspect about selling the centre. If the Government desire to raise the maximum amount of money in order to reduce the public sector borrowing requirement, they must sell to the highest

bidder. They will, therefore, look for a premium price. Who will pay that price? Which companies are most likely to offer the largest sums of money to the Government? There is a lot of evidence to suggest that TRC will be quickly snapped up by a foreign-owned company, probably by a major American chemical or pharmaceutical company. Such companies will want to buy it because of its tremendous success.
The hon. Member for Enfield, North (Mr. Eggar) seems to be nodding his head approvingly at the idea of an international company purchasing it. He now seems to be shaking his head. I do not mind if the hon. Gentleman has a 180 degree change of opinion about it. I had thought that the hon. Gentleman agreed that it would be nice if a large American international company were to pay a premium price for TRC. That would be absolutely disgraceful.
Fear and worry have led the staff to ask the Government not to sell more than 49 per cent. of their shares in TRC. If the Government wish to reduce the public sector borrowing requirement, they will be sorely tempted to allow the highest bidder to buy the company. That would not be in the interests of those who work there or in the interests of the nation. It would certainly not be in the interests of the development of TRC as an independent company.
Therefore, if the Government intend to reduce the public sector borrowing requirement, I hope that they will give a clear assurance about the sale. Before the Bill is enacted—given the Conservative Party's majority, the Bill will presumably be enacted during this Session—will the Minister give an assurance that the company will not be sold to any international or foreign company? Will the hon. Gentleman also give an assurance that TRC will be maintained as an independent company and that it will be allowed to thrive as it has in the past?
The Bill is the result of Conservative Party dogma and doctrine. The Government are committed to privatise wherever possible. It is sad that a successful concern should suffer from the Government's narrow, blinkered and doctrinaire attitude.

Mr. Skeet: The hon. Gentleman keeps saying the same thing over and over again.

Mr. Rowlands: Repetition of the truth does not do any harm. That is the sort of cant that we hear from the Government Front and Back Benches. The worries and concerns of those 1,100 people at Amersham and of those 400 workers at Cardiff who made a success of the company are at stake. We have a right to ask that the Government's doctrinal views should not overcome the views and attitudes of those who—as the Minister admitted—have made the company a success. It seems to be suggested that the Bill has been introduced to clarify the sale of BNFL shares and the sale of shares in the other companies owned by the Atomic Energy Authority.
In 1971 a Bill was introduced by, I believe, the right hon. Member for Bournemouth. West (Sir J. Eden). The debate was wound up by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). They are two purist monetarists and are as good free enterprise freebooters as one could come across. When the Bill was introduced, they both justified the idea that the Government should retain a majority share in BNFL and in TRC. They said that it was reasonable to constitute the two companies in


an autonomous way so that they would have commercial freedom within the structures of independent autonomous companies whilst the Government maintained a 51 per cent. shareholding in them.
In 1971 there was a happy consensus in the House. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) supported the Bill, along with the right hon. Member for Bournemouth, West and the hon. Member for Cirencester and Tewkesbury. A trinity such as that should never be destroyed. This Bill will break that consensus. It seeks to cast doubt on and destroy that consensus.
When the Minister replies, he may say that the Bill seeks to clarify the shareholding position in BNFL and TRC and the Government's right to sell a minority shareholding in either of those companies. If he says that, we shall not vote tonight but will give speedy support to the passage of the Bill. However, if the Minister seeks to retain a provision that will allow the Government to damage the company and to create uncertainty by selling more than half and probably the whole of TRC, we shall oppose the Bill in the Lobby tonight.

Mr. Patrick McNair-Wilson: The hon. Member for Merthyr Tydfil (Mr. Rowlands) has made extremely heavy weather of a very light brief. He has completely failed to understand the Bill's provisions. He brushed aside the fact that the 1946 and 1954 Acts create problems for my hon. Friend the Minister and for the Government. This Bill provides the Secretary of State not only with the power to acquire shares but with the power to dispose of them. I should have thought that that was a sensible thing to do.
With great respect to the hon. Member for Merthyr Tydfil, he tried to give the impression that those working in TRC would face a very bleak future if the hand of Government were removed from the company. The performance of the hon. Gentleman's party as regards nationalised industries—I refer not least to the Coal Industry Act 1965—probably sent a bigger shiver down the backs of those who work in nationalised concerns than any such prospect. The recent history of British Steel and the associated problems of job security will make those who work at TRC look forward to the day when they can shake off the hands of Ministers. As has been suggested, they probably look forward to the company's expansion in a highly successful industry.
I welcome the Bill not only because it provides for tidying up, but because I hope that it will mark a turning point—albeit a small one—in the fortunes of the nuclear industry. In the 1950s, we led the world in the use of nuclear power for peaceful purposes. Indeed, we were the envy of the world. Since then, regrettably, there have been many stops and starts and many doubts which have created an extremely difficult period for this great industry with inevitably low morale as a result.
I hope that my hon. Friend and his colleagues will ensure that a new impetus is given to the nuclear power industry in this country. We need a clear strategy for the next 20 years. We need a positive publicity and public relations campaign, not merely to allay the fears of those who are, perhaps, naturally concerned, but to show the positive benefits of the industry to the future economy of

the country. I hope that the example of the electricity industry in issuing stickers saying "Atoms for Energy" will be followed on a larger scale in future.
I understand from Mr. Speaker that because this measure deals with miscellaneous provisions we can range fairly widely across the whole industry. I am sure that the hon. Member for Truro (Mr. Penhaligon), who complained in a recent debate on energy prices that we had no opportunity of discussing the atomic energy industry, will take advantage of the ruling that has been given. I shall restrict my remarks to a fairly narrow but vital area in the nuclear energy industry. I hope that my hon. Friend will kindly address himself to the question that I posed to him at the end of that energy prices debate.
After an impressive start, we are now floundering. Regrettably, we have had major delays and cost escalations in the thermal programme. The AGR, through no fault of its own, has acquired a bad reputation. In fact, many of its problems relate to contractors' difficulties rather than to design problems. As a result, even now, in 1981, we are beginning to look at another reactor option. We have considered the options in the past. The Labour Administration considered the heavy water option. The Conservative Government stuck very strongly to the gascooled reactor option. I declare an interest in a company which makes graphite.

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I do not want the hon. Gentleman to go too far down that road. I was not here when he spoke to Mr. Speaker, but I think Mr. Speaker meant that the debate was wide in terms of its miscellaneous provisions. The hon. Gentleman must confine his remarks to what is in the Bill.

Mr. McNair-Wilson: I shall, of course, relate all that I say to the fact that the Bill gives the Secretary of State powers to sell off holdings not just in the Radiochemical Centre, but in a number of other companies in the nuclear industry. To that extent, I include the company with which I am concerned, which makes graphite. The general nuclear programme is affected by the wording of the Bill. I shall be careful not to stray too far.
Rather than develop a new and costly reactor system in the shape of the pressurised water reactor, it would be wiser to opt for a major leap forward towards the commercial fast breeder reactor. It would make for a better utilisation of fuel and would ultimately have the advantage of providing cheap electricity for our industries.
That is where the nuclear industry, above all, can offer positive gains. Over the years we have seen the whole hydrocarbon market, whether oil or coal, rise inexorably to the point where industry has suffered. If the base load of electricity generation can be carried by nuclear power—ideally by the use of a fast reactor—we shall be able to make a positive contribution to our energy costs and to the success of our economy. Therefore, I ask my hon. Friend to indicate the possible timing for the introduction of such a reactor.

Mr. Arthur Palmer: The hon. Member for New Forest (Mr. McNair-Wilson) raised one or two interesting topics, but they appear to be unconnected with the Bill. I, like him, am an advocate and a defender of nuclear power, but this Bill is a restricted measure.
I want to put one or two questions to the Undersecretary. First, why do we have the Bill at all? It is an extraordinary little measure. It deals with the affairs of the Radiochemical Centre, which is a highly successful enterprise. Indeed, the Minister did not deny that. In fact, he went out of his way to emphasise it. The centre is doing work of great technical complexity, work which needs high standards of care and safety in the manufacture and sale of radioactive materials for use in industry, medicine and scientific research.
In no way is this a British Steel situation. A Conservative Member drew a parallel with British Steel, but there is no such parallel. The centre is a prosperous industry by current standards. From my inspection of the ninth annual report, it seems that it pays a dividend of 12 per cent. on invested capital. That is not bad these days. If only all British industry were doing as well there would not be much wrong with our economy. The Radiochemical Centre is acting fully commercially. So I do not understand what the Under-Secretary of State meant when he talked about supervision in detail by civil servants. They should not be doing that. The shares are held by public agencies, but there is no reason for civil servants to butt into an enterprise of this kind that is working well. Such interference should be stopped, and I hope that the hon. Gentleman will do something about it.
The Radiochemical Centre is, as I say, acting commercially. It has a high standard of scientific research and development, and its products are distributed throughout the world. It is helping our exports. So what is its fault or crime? I cannot see what it has done wrong. The only fault which it appears to have, because of its very nature, is that all its shares are held by State agencies. Apparently, that is the only charge against it.

Mr. Dalyell: Its crime is the fact that it is a suitable and convenient sacrificial lamb to be sacrificed on the altar of demands that are made on the Department of Energy and every other Department by Downing Street.

Mr. Palmer: I am obliged to my hon. Friend. I shall come to the matter of Downing Street in a moment. The explanatory memorandum says, sadly, that the public custodians of the shares, the Atomic Energy Authority and the Secretary of State,
are not free to dispose of shares to mere investors with no expertise in the field".
In my opinion, they should not be free to do so. Those who have a say in the control of this work should surely have an expert knowledge of it. That, as a principle, was accepted by previous Governments, and I think that it should be accepted now. Indeed, my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) pointed out that the old Select Committee on Science and Technology which looked into these matters on an all-party basis in the late 1960s and early 1970s—I was Chairman of the Select Committee at that time—suggested this system of ownership with these safeguards. The Select Committee pointed to the importance of the industry to public welfare and to the community generally.
I am sorry to repeat this, but I am driven to the conclusion that the reason for the birth of this little wretch of a Bill is doctrine. There can be no other explanation. It represents that view of society and industry which believes that all public ownership, big or small, is

undesirable and, hence, should be restricted and, wherever possible, the assets sold off whatever the merits in a particular case.
I should like to see a better understanding between the parties on the mixed economy and ownership in industry. But if the time of the House is given to a measure which makes not the slightest practical difference when there is so much else to be discussed—for instance, of unemployment and inflation—any hope of getting any working understanding between the parties on the future nature of the mixed economy seems remote indeed.

Mr. Rost: Will the hon. Gentleman explain why he believes it is any more doctrinaire to argue that because an industry is in the public sector it should be allowed to be released from the public sector than to say that because an industry is in the public sector it should always stay in the public sector, which is what he is arguing?

Mr. Palmer: I suffer from the fault—a fault for which I can be blamed by hon. Members on both sides of the House—that I am a pragmatist. I believe that that which works best is best. I make no apology for that view. Here what is working best should be kept.
My hon. Friend the Member for West Lothian (Mr. Dalyell) referred to Downing Street. The Prime Minister, in the television interview that she gave to Mr. Brian Walden—an interview which is notorious for many remarks that she made—referred to a number of countries in Europe which she thought had done better than we have done in recent times. Those countries were presumably, she thought, close to her political ideals. The right hon. Lady mentioned Austria approvingly. Austria has a Socialist Government who operate an incomes policy in co-operation with the trade unions; it has also more nationalisation than any European country this side of the Iron Curtain. Socialism, nationalisation, an incomes policy are all things the right hon. Lady hates. Yet the right hon. Lady said that Austria was an example for us, apparently not knowing the nature of the economy of that country. It is certainly not a free enterprise economy.
But here I am not making points one way or the other. I am arguing that State-owned enterprises, if well managed, can be as efficient as the best private enterprise, and in this instance even more efficient.
I shall simply leave—

Mr. Eggar: Will the hon. Gentleman give way?

Mr. Palmer: I was about to sit down, but I will give way to the hon. Gentleman.

Mr. Eggar: Is the hon. Gentleman saying that if this company goes into the private sector it will immediately become less efficient?

Mr. Palmer: No, I am not saying that. It will probably remain as efficient as it is now, so why do it? What is the gain from change?

Mr. Eggar: Why not do it?

Mr. Palmer: I thought that I had already given the House that answer. We have more important matters to deal with than to give our time to this unnecessary measure. Certainly I believe that the House deserves a better explanation of the reasons for the Bill than has so far been given.

Mr. D. A. Trippier: I shall confine my remarks to the Bill and try to be brief.
The hon. Member for Bristol, North-East (Mr. Palmer) asked why we needed the Bill. The answer is fairly straightforward. I hope that hon. Members on both sides of the House recognise the necessity for the passage of the Atomic Energy (Miscellaneous Provisions) Bill both because of the legal and legislative precedents for such action and because of the advantages which would ensue from its passage.
At present, the sale of a minority stake in the Radiochemical Centre Limited is allowed under the Atomic Energy Authority Act 1971, although the sale of a majority stake is prohibited. The transfer of stock from the public to the private sector has many precedents, which are widely welcomed by Conservative Members.
In July 1979, the National Enterprise Board disposed of all of its 50 per cent. holding in Ferranti. We widely applauded that at that time. Plans have been announced to float shares in British Aerospace in the near future. Part of our policy is to encourage privatisation, and we do not in any way apologise for that. We intend in legislation to dispose of the minority interest in the British Transport Docks Board and provide disposal powers for Sealink, Seaspeed Hovercraft and British Transport Hotels—all subsidiaries of British Rail.
The British Telecommunications Bill will make possible a liberalisation of the Post Office monopoly on telecommunications and posts. Also, enabling powers will soon be taken to introduce private equity into the British National Oil Corporation and to dispose of both a majority interest in the National Freight Company and a minority interest in British Airways. All told, numerous attempts have been made to replace Government money with private capital and to increase the role of individual enterprise in the economy. The passage of the Bill would follow the precedent set by the actions that I have just mentioned.
Although the sale of a minority stake in the Radiochemical Centre by the United Kingdom Atomic Energy Authority is allowed under the 1971 Act, other existing legislation clouds the issue. Indeed, the framers of the 1971 Act, as well as the framers of similar legislation in the 1970 Labour Government, intended that a minority stake would eventually be sold to the public. However, the Atomic Energy Act 1946 imposed restrictions upon the disposal of shares by the Secretary of State in companies in the atomic power sphere. Furthermore, the Atomic Energy Authority Act 1954 may prohibit the sale of the shares by the United Kingdom Atomic Energy Authority if it is decided that such action is not consistent with the statutory functions of the authority.
The apparent conflict between the provisions of the 1971 Act and those of the 1946 and 1954 Acts seems to have been unintended and undermines the 1971 Act. It has not been decided whether the two earlier Acts affect the later one, but it is essential that all such unintentional restrictions be dealt with. These restrictions have the potential to cause further problems in the future as the Secretary of State would not be able to dispose of the shares in atomic power companies which the United

Kingdom Atomic Energy Authority is allowed to acquire and the authority would similarly be unable to sell shares after it had bought them.
The Bill would remove any possible uncertainties about the 1971 Act and would ensure that the spirit of the legislation remains unaltered. That is very important.
In addition to clarifying the position of the United Kingdom Atomic Energy Authority in relation to the disposal of its shares in the Radiochemical Centre, I welcome the fact that the Bill clarifies the position with regard to the centre's holdings in British Nuclear Fuels Ltd and in the National Nuclear Corporation. Although there are no present plans to sell shares in either of these companies—indeed, clause 1(6) specifically retains the 1971 prohibition on the disposal of more than a minority share in British Nuclear Fuels—the Bill prevents any future complications from arising. The only specific change regarding the disposal of shares affects the Radiochemical Centre, whereby the United Kingdom Atomic Energy Authority is allowed to sell up to 100 per cent. of its shares in the company.
The removal of uncertainty is not the only advantage of the Bill. All those involved with the Radiochemical Centre will benefit from its full integration into the private sector. The radiochemical industry is growing and changing extremely rapidly. The company will be able to react to the changes more quickly and efficiently if it is more a part of the industry. The employees of the company will benefit from the freedom of the private sector. Those benefits will extend to consumers, as radioactive isotopes are used in medicine and industry, in addition to scientific research. The House will not be surprised to hear me say that eventually all taxpayers and the economy will gain.
The provisions of the Bill will radically alter the connection between the Radiochemical Centre and Government. The majority of the company's finance is raised without Government guarantee and the management of the company is independent of the Government. Two loans made to the Radiochemical Centre from the Consolidated Fund represent the company's sole involvement with the Government, apart from the shares held by the United Kingdom Atomic Energy Authority. The proceeds of the sale of the Radiochemical Centre's stock would go to the Consolidated Fund to eradicate that debt.

Mr. Palmer: Will the hon. Gentleman give way?

Mr. Trippier: I do not have very much time. Many of my hon. Friends wish to speak.
As the company is not part of the nuclear industry, the Government loses no control of that industry by selling part or all of The Radiochemical Centre. Control over the supply of such chemicals as are produced by the Radiochemical Centre is not necessary, as countless other equally vital chemicals are produced by companies in which the Government have no direct interest. Such control is also absent in other industrially advanced nations including Japan, Germany and the United States.
The passage of the Bill will not weaken the Government in any way and will benefit the country greatly. Existing legislation will be clarified and the spirit of the 1971 Act will be preserved. The company will benefit from a more central place in the industry. Most important of all, strong advances will be made in the Government's efforts to strengthen the private sector of the economy.

Mr. David Penhaligon: I must confess that when I see a Bill with the words "atomic energy" written across the top I am likely to be against it. That is true today as on previous occasions. I regard the Radiochemical Centre as very much the more acceptable face of the nuclear industry. It is a company which has a great deal to be proud of and a number of people owe their lives to the genius and expertise which has been demonstrably displayed by that company. I have no wish to lessen the company's impact.
The company has won four Queen's Awards to Industry. A number of references have been made to its financial viability and the fact that it is a successful enterprise. When we consider the argument about who should own an enterprise of this size, I take the Government's view, in that I see little virtue in such an enterprise being State-owned. The Government will know that my colleagues and I have supported a number of measures to dispense with Government ownership of various enterprises.
We know that, no matter what the Government propose to sell, the Labour Party will oppose them, whether the enterprise concerned makes a lot of money or no money. That is not my party's position. We take a rather more pragmatic view. However, I am worried about selling this company and the implications of the sale. I shall explain why.
I should be willing to argue for a Government monopoly or near-monopoly in atomic energy. I am worried about the safety of the industry, as I know are great swathes of the British public. The public are confident in the knowledge that the Government are in charge of safety standards, own the company and will have to answer the questions about any incident happening anywhere.
Anyone who read the Three Mile Island report will know that the further involvement of the Government in maintaining standards and instructions has a great deal to do with the better safety record of the nuclear industry in this country compared with that of the United States.

Mr. Eggar: Will the hon. Member explain how the products that this company produces are in any way related to what happened at Three Mile Island?

Mr. Penhaligon: I shall explain that. The British Government, who have a near-monopoly of the entire industry from A to Z, have set up and maintain a number of standards of reporting and safety and general investigation which for a long time they have been able to swap between one aspect of the nuclear industry and another. That has produced a high level of engineering expertise in safety. If bits of the industry are to be sold off to different owners—I shall come to that—there will be a division of the great attempt to maintain high standards and a tendency not to swap information that each has gained between one branch and another

Mr. John H. Osborn: Is it not the task of Government to regulate, control and deal with health and safety at work rather than to own and run operations of this type?

Mr. Penhaligon: I do not argue with that in general, but in the exploitation of the potential of atomic energy I take a different view. I was disturbed about the implication

of what the Minister said. I am unsure about what the Bill allows the industry to sell. I should like a clear guarantee that the understanding is that nothing but the Radiochemical Centre can be sold without the direct and specific approval of the House. I have no wish to see the control of atomic power stations or any other nuclear installation put in private hands.

Mr. Eggar: I should be grateful if the hon. Member would answer my original question. What connection does the production of radioactive isotopes have with the generation of electricity by nuclear means?

Mr. Deputy Speaker: Order. I have listened carefully to what the hon. Member for Truro (Mr. Penhaligon) has said. He has been relating his argument to what is in the Bill. But I must ask him to keep to what is in the Bill and not to go too wide, which is likely to happen if he seeks to answer the hon. Gentleman.

Mr. Penhaligon: In my view, general safety standards are important throughout atomic energy. If that matter is maintained within a Government monopoly, the standards are likely to be higher than if it is diversified into a number of camps.
The Minister explained why further legislation is required. If there is a desire to put private capital into the enterprise, I cannot see why the sense of the 1971 Act could not be implemented even if slight modification is required because of the point made by the hon. Gentleman. I did not understand his explanation why the 1971 Act was defective, but if that was his argument the sense of the measure could have been implemented by a minor change to the law.
I argue strongly that if the company is to be sold a massive effort should be made to ensure that the shares are diversified among a large number of people so that no individual group or multinational organisaton succeeds in gaining control. The arguments for the employees virtually to be given a large stake in the capital appreciation of the company are strong. It is their genius, energy and enthusiasm which has made the company a great success. One hopes that that genius and effort will be maintained and will continue to add to the success of the company. As one who believes in an asset-sharing society, I see this as a good chance for the Government to demonstrate that they want to see a wide property and asset-owning society. They have a real chance to do something about it with the Bill. We have had this discussion before and I should have liked the Government to go even further with one or two of the Bills that are before us.
A number of people in the industry are concerned that an American company, New England Nuclear, which employees of the British company say is of a size similar to the Radiochemical Centre Ltd., has been taken over on the American stock market by Du Pont, which paid £150 million for it. That is considerably more than figures that have been mentioned for the valuation of the British company, though those in the industry do not believe that the American company has more assets than the British company and they would therefore expect a similar price to be paid for the Radiochemical Centre Ltd.
They are disturbed that they may become a mere branch of a giant chemical company. Despite what the Minister said about civil servants being endlessly involved in


various decisions, I understand that the freedom of those in the industry to practise and develop their expertise has been much appreciated and should be maintained.
My objection to the Bill and to the sale of the company is that they are to do with atomic energy. It is the strong view of the Liberal Party that the Government monopoly of the exploitation of the possibilities of atomic energy should be maintained.
We want to know what else in the nuclear arena the Government intend to sell. Do they look forward to the whole industry being privately owned? If so, there will certainly be opposition from the Liberal Party and from those who fear the industry, and the Government will have every conservationist in the nation on their back. I do not accept that the British people believe that the principle of a private enterprise economy, which Liberals support, is so important that it must be extended to small enterprises such as the Radiochemical Centre Ltd.

Mr. T. H. H. Skeet: The hon. Member for Truro (Mr. Penhaligon) put forward a threadbare case. There are not many Liberals left, and they do not make up for their lack of numbers by any strength of argument.
Opposition Front Bench Members repeat many things in an attempt to get the truth across. Unfortunately, it is not the truth that they are spreading, but never mind: they are entitled to make their utterances in the House from time to time. I wonder whether the new political party will have the same nuclear policy as the Labour Party. I always thought that Labour's policy was simply to advance the cause of coal, but we learn new things every day.
I fully support this interesting Bill. Under clause 1, the United Kingdom Atomic Energy Authority may dispose of any company
whose activities include the development of atomic energy or research into matters connected therewith or the production, treatment, storage or disposal of radioactive substances.
That is a broad provision and it will include all the subsidiaries not merely of the Radiochemical Centre, but of British Nuclear Fuels Ltd. and the National Nuclear Corporation.
In a debate on the Atomic Energy Authority Bill in 1970 the right hon. Member for Bristol, South-East (Mr. Benn) said:
It was a Bill to establish two new mixed-enterprise companies, one for nuclear fuel and one for radio chemicals, both with 100 per cent. Government holdings at the start and both with a statutory Government majority for all time".
It is the "for all time" that has created difficulties, and that is why we need the present Bill.
The right hon. Gentleman continued:
Thus we had the beginnings of the mixed-enterprise ownership pattern which is embodied in the Bill. Nobody has said it was wrong then, and nobody has said, not even the Minister, that it is wrong now. Of course it is not wrong in an area in which publicly-financed research figures very highly and is applied in industry. The mixed-enterprise arrangement was right."—[Official Report, 17 December 1970; Vol. 808, c. 1602–6.]
The Minister has indicated that he has no present plans for BNFL or the NNC, in which the Atomic Energy Authority holds a minority interest. I should have thought that it would be in our interests to dispose of those companies at the earliest opportunity, though I am prepared to agree that a time limit should be put into the Bill. We have another

Bill coming forward shortly dealing with the British National Oil Corporation in which powers will be taken. But will they ever be exercised? That is why I asked the Minister whether he intended to exercise the powers during the lifetime of this Parliament.
The Opposition argue that there is no case for the Bill. They ask why a public asset should be disposed of. But the assets are owned by you and me, Mr. Deputy Speaker, and if we wish to dispose of them to private enterprise, for any reason, it is a good move.
If the hon. Member for Merthyr Tydfil (Mr. Rowlands) were in Government and were prepared to run the Radiochemical Centre Ltd., he would be prepared to run every company in the country. If he were to put the profits into the Consolidated Fund they would be used for a number of miscellaneous Government purposes or to discharge the losses incurred by British Leyland and the British Steel Corporation.
I should like to see the close monitoring and interventionism of the Government removed from the three companies that I have mentioned, particularly in view of the poor record of Governments over the past 35 years. The managements of the companies share my view. Furthermore, why should the taxpayer provide additional funds and capital for any of those companies? If they want additional funds they can go to the market, the banks or any shareholders that they can find.

Mr. Palmer: On a point of order, Mr. Deputy Speaker. The hon. Member for Bedford (Mr. Skeet) is dealing with the affairs of the National Nuclear Corporation. The Bill has nothing to do with the NNC.

Mr. Skeet: It is interesting that the informed and erudite hon. Member for Bristol, North-East (Mr. Palmer) should have made a speech without, apparently, having read the Bill. I must take him to task. Clause 1 states:
This section applies to the power of the Atomic Energy Authority to dispose of shares held by the Authority in any company and to the power of the Secretary of State to dispose of shares held by him in any company whose activities include the development of atomic energy or research into matters connected therewith or the production, treatment, storage or disposal of radioactive substances.
When dealing with treatment and storage, we are concerned with BNFL. When dealing with research, we are concerned with the AEA. I am surprised that the hon. Member for Bristol, North-East, who has such an acute mind, should have overlooked the elementary matters contained in clause 1. Perhaps he would like my copy of the Bill.

Mr. Palmer: The point that I was making is that the Bill is related essentially to radioactive substances.

Mr. Skeet: No. I should like the Bill to be entitled The Radiochemical Centre Limited (Disposal and Miscellaneous Provisions) Bill. However, the Government have made it even broader. Fortunately, we can dispose of all the companies. We could even dispose of the AEA with the Minister's assent. However, the Government have been wise. They have provided that disposals may take place only if they will promote the national interest. That is the safeguard. I should not like the hon. Member for Merthyr Tydfil to complain about the national interest. The number of things done by the Labour Party in the national interest is legion. One thing can be relied upon. Conservative Ministers take it very much into account.

Mr. Penhaligon: The hon. Gentleman and I often meet in these debates, and we know each other's views about atomic energy very well. Can the hon. Gentleman tell us how much he would like to see sold off? Would he like to see it all sold off? Does he look forward to the idea of a private enterprise nuclear waste dump in the middle of Wales? As one of the great advocates of the industry, what does he see the Bill leading to? How much does he want sold off?

Mr. Skeet: The hon. Member for Truro can ask me all sorts of questions. For my part, I am only too glad to give him an indication. Two years ago I had a Private Member's Bill setting up a nuclear waste disposal corporation which would be 100 per cent. Government owned. It would never have been profitable. I think that there is an argument for keeping a State holding in the Atomic Energy Authority for some years to come.
I believe that the three companies that I mentioned could suitably be sold off in the course of time. The market has a unique way of looking after such assets. I can deal with this point more fully by considering the situation abroad. The New England Nuclear Corporation, to which the hon. Gentleman referred, dealt with radio isotypes in the United States. That enterprise has now been acquired by a chemical company. I do not see President Reagan and others getting excited that that may let down the national interest. Far from it—all these matters can be referred to the appropriate authorities at the appropriate time. If the undertakings abuse their authority, they can be taken over.
In France, apart for Amersham France SA, which is a subsidiary of TRC, the comparable body is the International CIS company which is owned by the CEA and Sorin Biomedica. There we have the State largely controlling the company. But when one moves a little further, to the comparable situation of British Nuclear Fuels Ltd., one finds the following situation in France. I mention France because it is one of the leading nuclear countries of the world.
The company in France is Franco-Beige de Fabrication de Combustible. That is owned by a number of enterprises—Framatome, Pechiney-Ugine Kuhlmann, Westinghouse Electric—I understand that that holding is probably being returned to local private enterprise—and Creusot-Loire. Those companies, with a few others, hold an interest in the nuclear fuel manufacturing enterprise. So, even with their philosophy, the French believe in and tolerate having the shareholding of the company very broadly distributed. That is the position in France compared with that of British Nuclear Fuels Ltd. in the United Kingdom.
Let us consider the National Nuclear Corporation, which we hope will build a number of nuclear power stations here. The French one is Framatome. I do not think that anyone doubts that that has been successful. It has about 60 reactors either built or under construction. That company is owned by the Empain Schneider Group, through a subsidiary, Creusot-Loire, 55 per cent., the CEA, which is the State body, 30 per cent., and Westinghouse, which has now been retired, held the other 15 per cent. The current position is 70 per cent. private enterprise and 30 per cent. held by the national body, the Commissariat a L'Énergie Atomique.
What France is doing—and this is what I recommend that the United Kingdom should do—is gradually phasing out the State enterprises or at least some of these

enterprises, particularly the three with which I am primarily concerned. Let the private sector come in and gradually take them over and manage them. What is left for the Government to do is to lay down safety regulations, to see that they can be properly monitored, as all private companies can be, even in a sector of this nature, and to see that they are properly administered.

Mr. Penhaligon: Sell the lot.

Mr. Skeet: I did not say that, because I have said to the hon. Member for Truro that I would not sell the lot. I should keep an interest in the Atomic Energy Authority because I think that it is important that we should do so, but I should be prepared to dispose of those companies—BNFL, NNC and the Radiochemical Centre Ltd.
I say that because I am very interested in the fuel cycle, and that is what British Nuclear Fuels is concerned with. That is an enterprise that I should dispose of over a term of years, in phases, but I should certainly get it despatched fairly quickly.
We know that the French have been very successful with regard to their nuclear costs. In the United Kingdom, I believe that the Minister himself made a comparison between Hinckley Point 'B' and Drax. The cost of nuclear power is 1.35p per kilowatt hour as compared with Drax, where it is 1.52p. That is comparing relatively new stations. If we could have all this advantage in nuclear costs, we should go via the nuclear route. If we go by the nuclear route, integrating backwards, this comes back to British Nuclear Fuels Limited. It is vital that we allow other people to participate in the companies' development.
One could also consider the newer power stations. I shall not weary the House by dealing with all of these. [HON. MEMBERS: "Oh".] My hon. Friends have a great appetite for hearing things that come out of various publications. However, I have given an assurance to you, Mr. Deputy Speaker, and I am mindful of the fact that I wish to speak next Monday on the gas levy. I fear that if I overstep the mark today, Mr. Deputy Speaker, you will be looking over your glasses rather earnestly and saying "Skeet, you have forfeited your position next Monday". I must therefore be disciplined and abide by the rules.
To sum up, I believe that the Government have been courageous in bringing the Bill forward. They have argued their case very realistically on one company at Amersham, which has another plant in Wales, and a number of overseas subsidiaries—in the United States, France, the Netherlands, Germany and elsewhere. It is a very profitable company which could be adequately placed in the private sector without interfering at all with the nuclear power programme. It should be the Government's policy to have relatively cheap transport and energy costs. The French have given a lead. It might be a wise idea to follow the lead that they have established if we are later to enjoy economic prosperity.

Mr. Tim Eggar: I feel very humble in following my hon. Friend the Member for Bedford (Mr. Skeet), whose knowledge in these matters is well known to the House. I shall be brief, as I, too, am interested in speaking on Monday and I do not wish in any way to impair my chances of catching your eye at that time, Mr. Deputy Speaker.
I welcome the Bill as the initiation of a programme of privatisation in the energy sector. We are dealing today with a relatively small company. I hope that this beginning will fire the imagination of the Government so that a BNOC Bill will speedily be introduced to ensure that shares in BNOC are sold as soon as possible. I trust that there is no question of that Bill slipping behind. I hope that the Government will then turn their attention to the British Gas Corporation. I believe that there is a great deal which could be sold on the periphery of that corporation, and I hope that in time we shall see the introduction of private capital into the core business of BGC.
I return to the main purpose of the Bill, which is the privatisation, as it were, of the Radiochemical Centre. First, I am sure that Conservative Members recognise the points made from the Opposition Front Bench. We are dealing with a well managed, profitable and well run company. It is a tribute to the management and staff of that company that it has such a fine record to lay before the House. The fact that it has been so successful is no reason to keep it within the public sector. In May 1979, the Government were elected to bring back private enterprise and to denationalise wherever possible. It is therefore quite correct for them to be fulfilling a manifesto pledge on something which many Conservative Members regard as an important part of Conservative Party policy.
We should go a little further. Inevitably, when boards of companies which are controlled by the Government make decisions, they must look towards their ultimate shareholder. The example has already been given of the £20 million that was raised for the new Cardiff plant. It is true that, apart from a small equity injection, the Government did not have to put money into that development. Nevertheless, in the planning and financing of that plant the management concerned must have asked, "What will the Government say? Will they be prepared to come up with the necessary finance? What will their angle be?"
Exactly the same situation pertained when considering the possible positioning of a plant overseas to manufacture radio isotopes. Such management would have to ask "Whatever our commercial judgment may be, would the Government go along with it? Would they as a shareholder inject the necessary equity?" It is therefore right for the Bill to come forward so that the element of uncertainty which must have played a part in the decision taking of the board can be removed.
There is something further that we Conservatives should say. Rightly, in my view, the Government have a coherent industrial strategy which in a number of specific cases involves the provision of aid to help companies in certain positions and, indeed, in certain geographical areas. Just as it is right for Government to put money into private enterprise companies which have certain temporary problems or even major problems—British Steel is an example—so also is it right that part of that coherent industrial strategy should be to return public sector companies to private enterprise. There is absolutely nothing wrong with that. I welcome it. I should have thought that the Labour Party would have accepted it. In a modern, complicated, industrial society there must be a movement between the public sector and the private sector. I see that as a two-way street.
I therefore regret the dogmatic view which has been taken by the Opposition Front Bench. Their argument is that this company was owned by the State and, therefore, it should stay owned by the State. But the same argument is not advanced when private sector companies get into difficulty. We Conservatives are quite prepared to say "All right, we accept that public sector money should help private enterprise firms in difficulties". I wish that Labour Mambers would display the same pragmatism in reverse.
We must also look to the ultimate destination of the ownership of the company.

Mr. Palmer: In principle, I do not disagree that in a mixed economy there should be a two-way traffic. But surely the practical test is the success of the enterprise. In other words, one leaves well alone.

Mr. Eggar: That is an extraordinary argument. What particular reason is there to keep this company in the public sector? One simply cannot say "It is working fine at the moment". That does not mean that it should always stay in the public sector. Indeed, it is a justification for returning it to the private sector. The company's very success shows that by selling it the Government will raise funds. I have no idea exactly how much. That must depend on the timing of the issue of shares and the sale of shares. However, the sale of a successful company would result in a good return on the Government's investment which could then be used to help companies which are in difficulties.

Mr. William Waldegrave: Does not my hon. Friend agree that the Government have recently given a good example of this two-way street by investing considerable sums of money in Cambridge in the latest advanced technology of microbiological techniques? By doing so, they are doing what we did just after the war in regard to nuclear matters. At that time we helped the industry get off its feet so that it could become self-sufficient and then reinvested the money in the new frontier technology.

Mr. Eggar: I could not agree more. The whole point is that an industrial strategy is not a strategy to help lame ducks. It is a strategy for picking winners and for moving companies in and out of the public sector. It is unfortunate that the Opposition should be so totally dogmatic in their statements today.

Mr. Rowlands: Perhaps the practical argument will appeal to the hon. Gentleman. Surely the wishes of the staff, management and scientists who have made this such a success story should be high, if not paramount, in the Government's thinking, especially as it cannot be proved that the wish of the overwhelming majority of the staff at the Radiochemical Centre is that the Government maintain a majority shareholding. Would the hon. Gentleman observe those wishes?

Mr. Eggar: Of course. We should pay attention to the wishes of the staff. The Government must give some weight to them. When I refer in a moment to how the shares should be disposed of, I shall comment further on that point.
We cannot have a situation whereby a company which happens to be 100 per cent. owned by the Government can be completely inviolate from takeover by any other company so that the staff achieve the position of civil servants and have long-term job security which they would


not have in the private sector. Such a company should be subject to the variations and movements of the market, just as a similar company would be in the private sector and just as the United States company has been relatively. If such companies are successful, and many of us think that they are, no doubt they will be given additional freedom of operation and additional opportunities by becoming part of the private sector.
Obviously, while the hon. Member for Merthyr Tydfil (Mr. Rowlands) has been sitting down, he has been thinking of a lot more arguments which he was unable to deploy in his speech. When he spoke, he merely reiterated the same argument about five times.
I hope that we will give some consideration to the way in which we dispose of this company. I accept the point made by the hon. Member for Merthyr Tydfil. I believe that we should follow what I hope will be a successful precedent set by the sale of shares in British Aerospace. In other words, we should make it quite clear that we do not wish control of this company to fall into foreign hands. It is easy to ensure that by limiting the percentage of shares which can be held or registered by foreigners.
Secondly, I hope that it will be a public offering rather than a private sale to one other company or conglomerate.

Mr. Bob Cryer: rose—

Mr. Eggar: I am sorry, but I wish to develop my argument. I have been extremely generous in giving way.
We must try to give priority to British ownership. We must also try to ensure that the shares are held as widely as possible. By that, I do not mean that they should be held by one or two pension funds. I do not want to see them placed with one or two institutions. I hope that we shall follow the sytem used for British Aerospace where preference has been given to small allotments. In that way, ownership would be spread to individuals, which would be genuinely welcomed. I hope that the Government will also consider whether it would be appropriate to set a maximum percentage shareholding for any one company, institution or individual so that we achieve wide, and largely British, share ownership.
I fully support the Bill. It is a welcome development from the Department of Energy. I hope that the precedent that it sets will be taken further, and that we shall see the same forthright and powerful application of Conservative policy in our dealings with the British National Oil Corporation and the British Gas Corporation.

Mr. John Watson: The main purpose of the Bill is to give the Secretary of State power to remove the Radiochemical Centre Ltd. from the tender loving care of the Atomic Energy Authority and to place it in some form of private ownership. The Bill has been referred to as an insignificant measure. It may be insignificant in volume, but emotionally it strikes at the heart of the difference between the two major political parties. One can tell that from the terminology that has been used. If the Opposition wish to nationalise anything they do so as a burning matter of principle. Whenever the Conservative Party wishes to denationalise anything, it is accused of doing so because of party dogma.
This year, the Radiochemical Centre Ltd. will have sales totalling almost £50 million. Last year, it made a profit of £4 million. It has 2,000 employees. It raises most

of its own finance. It is a manufacturing company selling to the medical, chemical and pharmaceutical markets throughout the world, and 83 per cent. of its products are sold overseas. It is an ethic of Conservative political existence that there is no earthly reason why such a successful company should remain in the public sector. There may be strategic reasons why, at certain phases in a company's development, public ownership has some relevance. But if ever that was the case with this company, that moment has long since passed.
The hon. Member for Truro (Mr. Penhaligon) said that there might be a strategic need for the company to remain in the public sector. I was briefly entertained by his speech. He informed the House of what his Bench would need to know. It might be churlish of me to observe that at that moment there was a certain similarity between his Bench and the opinions that he put forward—namely, they were both empty. Has he read the list of products manufactured by the company? What does he consider to be the strategic need of radioimmunoassay serum ferritin, or rabbit reticulocyte lysate? That is a challenge to the Hansard Reporters, if ever I heard one.
If it is considered strategically necessary for such substances to be manufactured by a company within Government control, why is it not considered necessary for such substances as dynamite, TNT or even penicillin similarly to be manufactured by companies under Government control? The United States finds no problem in having the equivalent company on that side of the Atlantic in private hands. The Japanese and the Germans have no problem in avoiding the existence of such a company at all.
I take slight issue with my hon. Friend the Member for Bedford (Mr. Skeet)—I hope that I am not trespassing on a dangerous minefield—because I do not think that the same arguments can be extended to companies such as British Nuclear Fuels Ltd. That company, which buys almost all of its inward goods from the nuclear industry, and sells most of its outward goods to that same industry—with the goods being at least potentially capable of making nuclear bombs—provides a substantial strategic case for a company remaining within the public sector.
I question the possible future contribution that the Radiochemical Centre Ltd. can make to the Government and to the public sector borrowing requirement. That point was put with some power by the hon. Member for Merthyr Tydfil (Mr. Rowlands) in his opening speech. Last year the company made a profit of £4 million—£2 million less than the previous year. In his forecast for future years, the chairman said:
Although 1980/81 will be another difficult year, thereafter a strong upward surge in profitability into the mid 1980s is planned and expected, provided that an appropriate adjustment of sterling's international value takes place. As a result of measures already taken or in hand the necessary production capacity will be available.
The appropriate adjustment in the international value of sterling has not taken place. It may be that the profits, not only this year but in future years, will be somewhat less than they were in the immediate past. That should not detract from the "saleability" of the company in any way, but it might detract from the contribution that it might otherwise make to the public sector borrowing requirement.
I wish to support my hon. Friend the Member for Enfield, North (Mr. Eggar). If we are to dispose of the company we must give serious thought to creating as wide


a franchise of share ownership as possible. I say that for a number of reasons. A wide flotation through the Stock Exchange will probably produce at least a realistic price, and possibly the best price. We have heard references to the morale and motivation of the company's staff. Clearly, with a high technology company, such morale and motivation are of paramount importance. One could almost say that the assets of the company go up and down in the lift every morning. If the staff will feel more content because it is holding a certain percentage of the shares—with the great majority of the remaining shares held by the British public and not, therefore, vulnerable to a takeover by an American company—so much the better.
There may be some risk of an individual company, possibly not in Britain, buying the company as a defensive measure. We have had experience of companies taking defensive licences for products—in other words, taking a licence without any intention of exploiting the product but simply to keep it off the market so as to preserve the sales of other goods. That problem could best be obviated by wide share ownership.
The accounting policies of the Radiochemical Centre Ltd. have been correctly pursued in a cautious manner. An individual company buying that company might, by dint of acceptable creative accounting, generate a greater degree of profit than has been the case to date. For example, the company spends about £5 million a year on research and development. All of that sum, quite correctly, is written off as revenue in the current year. Much of it relates to laboratory equipment, which would be available for capitalisation if the management so wished.
The company operates a stock policy on the basis of FIFO—first in, first out. Through constraint of circumstances, most of British industry is currently operating on the FISH principle—first in, still here. With the auditors' permission, some ameliorative adjustments could be made in that connection, thereby adding artificially to the bottom line figure of the company.
I wish to refer to what was said at the outset of the debate. The Government have been accused of dogma in wishing to dispose of the company. I refute that charge. I ask Opposition Members to accept that it is not dogma that makes us wish to sell the company. Instead, it is a pure, simple and fundamental part of our philosophy as a party. I appreciate that the philosophy of Opposition Members may not be in line with that which I have articulated. I humbly remind them that our philosophy is the one that has been most recently endorsed by the British electorate.

Mr. Peter Hardy: I have listened to the debate because of my interest in energy, but I did not intend to take part in it. I do not wish to challenge the integrity of the hon. Member for Skipton (Mr. Watson) by contradicting him about dogma, but he spoke not about dogma, but about dreams. If the Bill took back rather than handed over, not so many Conservative Members would be eager to see where the opportunities lie. We are grateful to the hon. Member for Skipton for spelling out another of the company's attractions for people who wish to get

their hands on it, namely, that it is fiscally attractive. A company that wishes to pay a little less to the public purse will be able to do so by acquiring this asset.

Mr. Rost: Will the hon. Gentleman explain why it is greedy for employees in nationalised concerns to be given the opportunity to get their hands on the shares of firms for which they work, and why it is not greedy for the Government to take their grubby hands off a company when it is denationalised?

Mr. Hardy: The hon. Gentleman describes his own Government's hands as grubby, and I agree with him. We do not have such tight dogmatic beliefs as do the Government. If the Government were determined to reduce the State's hold on the company, it might be a good idea to set up a co-operative. As the hon. Member for Skipton said, the assets of the company basically are the skills and abilities of the people who work for it. Why do the Government not establish a co-operative, rather than put the nation at risk by handing the company over to the Arabs, the Japanese, the Germans or the Norwegians? I refer to the Norwegians deliberately because of the privatisation of a company in my constituency. A national asset is likely to be handed over in the name of privatisation to a publicly owned firm based abroad. Conservatives in other parts of the world might raise their hands in horror at the Government's reckless profligacy.
I take a reasonable and balanced view. It is that a company with the record of success achieved by the Radiochemical Centre Ltd. is doing so well that we should leave well alone. The hon. Member for Skipton referred to the company's profound achievements. The Minister talked about its commendable record of 60 per cent. export output—and he referred to the four Queen's awards for export achievement. If a company is doing as well as that the Government should pause before they apply their dogma. If they want to demonstrate that they are modern and progressive, they should consider the co-operative approach and allow those who represent the assets of the company to have a greater stake in it. That would demonstrate an absence of dogma and be a worthwhile experiment.
How much would the taxpayer receive from the sale of the Radiochemical Centre Ltd.? The Minister suggested that in the seven years since the Cardiff development began in 1973 £20 million had been invested. That suggests that the real value of the Cardiff investment exceeds £50 million and that the value of the total activity at the Amersham base must exceed £100 million. It is reasonable to assume that the real value of the company's equity is in excess of £150 million. Given the profits declared in the last few years, that seems to be a modest estimate.
I asked the Minister a legitimate question, which should be answered. For how much do the Government intend to sell the company? If the figure is too low, in addition to being dogmatic, the Government will be grossly irresponsible in failing to serve the interests of the British taxpayer. If the Government sell the company to foreigners, widows, pension funds, or whoever, for less than a reasonable and honest sum they will act not merely irresponsibly, but in a manner that could be called criminally conspiratorial. In order to demonstrate that the Government are not embarking on a criminal conspiracy, or something that smells like it, the Minister should provide an estimate of the benefits to the PSBR.

Mr. Waldegrave: The hon. Gentleman is a believer in the mixed economy, as I am. I am driven to my feet by his constant use of the word "dogma". The Government are investing large sums in new technology, such as Inmos and biotechnology. Surely it is sensible to float successful operations in which the Government have invested in order to roll the investment over into new technology.

Mr. Hardy: I take the view that the National Enterprise Board was a useful development which should have been expanded. People running such boards should be given freedom to move in and out of companies and to indulge in experiments. However, I am not sure that I can approve of this development, since it is not left to the judgment of the NEB, for example, or to that of those who have proved their capacity for business and their concern for the nation's interest. Such action has not been taken by the present Administration. If the people who are concerned for the welfare of the British people were involved in such decisions, I should be prepared to be more generous.
The Minister justified the need for the word "dogma" by talking of rolling back the frontiers of the State. If Britain is to move forward in high technology, where its future lies, the State's role is essential. Without it the fruits of entrepreneurial investment will be delayed by 8 to 12 years. If the State invests, it is wrong to require the taxpayer to pay out the initial investment, to wait and sustain the investment in the years before it bears fruit, and then to roll back the frontiers of the State so that others can make profits.
The hon. Member for Sheffield, Hallam (Mr. Osborn) will understand why I am present today. I am as much concerned with the special steel industry as with the atomic energy industry. Today I tabled an early-day motion to congratulate the people in the special steels division in Rotheram, and at the Thrybergh Bar mill in particular, on breaking yet another set of world records last week. They have done that, not merely because they want their pay at the end of the week, but because they have a pride in their activity and want to see the steel industry in Britain succeed. If they believe—and this may apply to the workers in Amersham and Cardiff—that their endeavours, their improved relationships and their activity and devotion to work are merely to put profits in the hands of perhaps even a minority of shareholders who may be Arabs or Japanese, their incentives and motivation will be affected.
If this country is to survive, it is time that the Government began to understand that motive and incentive in British Industry do not depend upon the carrot or the whip. They lie in the hearts of people. They lie in the hearts of the steel workers in South Yorkshire, as I believe they lie in the hearts of those operating for this company in Amersham and Cardiff. That is why I suggested to the Government that instead of selling off the company and pretending that it will go in small lots to widows—who would be better advised to put their money in building societies, which would be in the national interest—they should show us that they are flexible and that they have vision, perception and imagination. Let the workers share with the taxpayer the future benefits, which should accrue to the worker and the taxpayer. The handing over of those benefits on what I suspect is less than a reasonable market valuation justify the taunt or accusation of conspiracy and crime.

Mr. John H. Osborn: The hon. Member referred to State involvement in the steel industry and special steels. At the moment, Government funding of the British Steel Corporation is putting in jeopardy the firms that are left in the private sector. Therefore, the State must know when to put its foot in and when not to.
The hon. Member also referred to taxpayers' money and the interest of those working in an industry. One of the aims of a society, such as the free enterprise society in Japan, is to put the pension funds and the insurance of ordinary citizens into the wealth-creating activity of the country. Is that not something that we have missed out on over the last 25 years?

Mr. Hardy: Successive Governments have used the taxpayers' money in the way that the hon. Member for Sheffield, Hallam has commended its use in Japan.
As the hon. Member knows, the Rotherham works are an important part of the British Steel Corporation. I accept that the special steels section may be making a loss and may have done so exclusively as a result of Government policies over the past 18 months, but the hon. Member, being a Sheffield Member of considerable experience, is aware that during the post-war period that part of the British Steel Corporation made substantial profits. I am not prepared to accept that the taxpayer has forked out large sums of money for the British Steel Corporation in South Yorkshire, because that is not true. Since nationalisation, much money has been earned by that profitable sector. However, a great deal of money has been invested at Aldwarke, Roundwood and Thrybergh with the continuous casting at Templeborough.
Without being offensive to the private sector, I suggest to the hon. Member that if it had devoted a sufficient share of its profits in the past to ensuring that it, too, had modern kit and plant in every particular it might not be in such difficulties today. I am not saying that we should not assist and sustain industry. The role of the Government, like that of Governments in Japan, America, Australia, France, Germany and everywhere else where there is sanity in administration, is to provide that sustenance. The sad fact is that the Government, faced with an appallingly critical industrial situation and the certainty of 3 million unemployed in 1981, are wasting their time, our time and the country's time with this sort of frivolity.

Mr. Peter Rost: I shall not take up the comments of the hon. Member for Rother Valley (Mr. Hardy) because I want to get back to the Bill. Like my colleagues, I welcome the Bill, but the reaction of the two or three members of the Labour Party who have been in attendance has been predictable and typical. They say that because the company is part of the public sector, and because it is nationalised, it must remain so, irrespective of the circumstances. When the company was formed, it might have been justified to have State support, but the argument that that might not apply today, is neglected and overlooked. It is regarded as doctrinaire if we take a pragmatic view of individual pieces in the public sector and decide that the justification for them staying in the public sector is no longer valid.
The Labour Party regards nationalisation, State control and domination as a one-way ratchet which must never be a two-way process. It does not seem to occur to it that there


are arguments, which we have put in the debate, to justify the sale to the public of industries in the nuclear sector which are now State controlled.
I shall emphasise the main arguments why the Bill should be supported. It has been suggested by Opposition Members that, because of the profitability of the Radiochemical Centre and other nuclear companies, such as British Nuclear Fuels, which come within the category of the Bill for denationalisation, one should leave well alone. That is a valid point. However, it completely overlooks the argument that they could be more profitable if they were given the commercial freedom of the private sector instead of having to come cap in hand for every piece of borrowing which they have required over the years.
It could be argued that if those companies had total freedom to take commercial decisions instead of being overrun by men from the Ministry, their profits could be more substantial, they could be employing more people than they are today and they might develop their export potential more successfully in the areas of high technology in which they operate. I cannot say whether that is so. One must speculate about it. One can only speculate that it could be so. That is a valid argument for suggesting that it is not necessarily justifiable to argue that, because those firms are doing relatively well, they should be left alone.
The argument is comparative. One could cite many more examples in the private sector where, released from the control of politicians and civil servants, commercial freedom has given a new impetus to a company. That impetus is given not only by denationalisation, but by the possibility of private shareholdings and the accountability which that produces.
I shall give the obvious follow-through example of that. If a company which has now one shareholder, namely, the State, were to redistribute its shares widely—as my colleagues have suggested should be done, which I support—and were to give a generous allocation of those shares to the employees who have helped to build up the success of that company, as we are doing with British Aerospace this Friday, who is to say that that would not provide a stimulus? It would provide an incentive and a new motivation for such companies to surge forward, improve their productivity and profitability, their export markets and their employment opportunities. Evidence exists to support that argument, although I do not expect the Opposition to accept it. Wider share ownership—democracy—should be applied to individual firms. It can be an added incentive in helping to create wealth. That is a fundamental argument in favour of the Bill.
My hon. Friend the Under-Secretary was a little too timid. Under pressure, he admitted that there was no immediate intention to dispose of the shares in the Radiochemical Centre. He was even more hesitant about the disposal of part of the State's holding in British Nuclear Fuels, which is a larger company than TRC, with higher profits. It has an extremely good record in its advanced technological field of processing nuclear waste from Japan and other European countries, as well as from our own nuclear industry. It has tremendous potential to develop the technology in world markets. Like RCL, that company has to some extent been undercapitalised, because the men from the Ministry vet its every move.

With more privatisation, commercial decisions could be taken to raise money from shareholders or on loan finance, which would allow development and expansion with less restriction. That is an important consideration, which should make my hon. Friend less timid.
We are proceeding with our manifesto programme successfully in other measures that the Government have introduced to reduce State control and nationalisation. I hope that the Minister can assure us that this proposal will proceed without delay.
The Bill will enable us to proceed with the sale of part of the equity of British Nuclear Fuels to the employees who have helped to make the company a world renowned success. We could also use the powers under the Bill to reduce the State's holding in the National Nuclear Corporation. There is no justification for the State to retain a major stake in that corporation. It would proceed more successfully and dynamically if some of the shares could be redistributed, with preferential and beneficial participation for its employees.
I welcome the Bill. It is in line with Conservative philosophy. We believe in genuine public ownership and not State monopoly ownership. Wider share ownership and employee participation are major incentives for wealth creation. By privatisation and reducing the State sector where justifiable, we can provide greater opportunities for companies to grow more rapidly and profitably. That argument applies particularly to such companies as the Radiochemical Centre, British Nuclear Fuels and the National Nuclear Corporation, which deal with advanced technology, where this country has to excel if it is to survive.

Mr. Bob Cryer: Dogmas have been mentioned. Every hon. Member is elected on the basis of some sort of dogma. The difficulty for the Conservatives is that their dogma is palpably failing. We have the highest unemployment level since the war, productivity is low, production is falling year by year and profitability is at an all-time low. Capitalism, which is the Conservative beacon, does not seem to be the success that they claim. In June 1979 the Chancellor of the Exchequer gave tax concessions to entrepreneurs so that they could invest that money and provide jobs. Where are those jobs?
Public enterprise has been successful in the sectors covered by the Bill. Because of their own failings, and to satisfy their friends, who have not been able to develop their dogma satisfactorily, the Government are pushing through legislation to enable them to get rich pickings from the public sector. The Conservatives want it both ways. On future election platforms, when they mention nationalisation they will talk about failure, debts and the cost to the taxpayer. Not one will mention the successful side of public enterprise, which makes handsome profits and provides a public service. It is those sections that they are concerned to sell off. They have not considered legislation to sell off rural branch lines, which cost the taxpayer a great deal. They have not introduced legislation to sell off part of the steel industry. The cost is too great for private enterprise. Thay are interested only in selling off the rich pickings. Profit and greed are the dogmas of the Conservatives. They elevate them to a principle.
I have two points to make about the Bill. First, the Government are stepping into murky waters. This industry is not like any other. It is potentially hazardous. Private


enterprise tends to cut corners in order to boost profits. Conservatives may say "Tut-tut, that is totally wrong", but over the past 100 years or so successive Conservative Governments have introduced legislation to ensure certain operational standards for private enterprise, even before a significant public sector came into being, post-1945. They were concerned about short cuts. They also know that private enterprise safety standards are not necessarily the best.
Secondly, we have the experience of America—that Valhalla of capitalism—where the man on the white horse from the B movies is now holding the reins, metaphorically and occasionally literally for press cameras. Private enterprise in the atomic energy industry there has not been found to have entirely satisfactory safety standards. We should remember Three Mile Island. It is generally felt that private enterprise standards of safety in America have been very much behind those of public enterprise here.
The hon. Member for Derbyshire, South-East (Mr. Rost) talked about accountability to shareholders. Will shareholders prod and poke around the works to ensure that safety standards are applied? Of course not. They are looking for their profit. If that profit is returned, they will presumably be satisfied. What about public accountability in this Chamber and in this Parliament for safety standards? As soon as these companies become private, the right of accountability to this House, although not totally ended, is severely diminished.

Mr. Rost: I am grateful to the hon. Gentleman for allowing me to respond to the naivety of his argument that shareholders who had invested their savings in a company would not be concerned about the safety of the factory that happens to be producing the products in which they have invested. The opposite is true. They would be most concerned that the company should remain in business. It would not remain in business if it had a serious accident of the sort that the hon. Gentleman describes.

Mr. Cryer: I take an example. Where would a group of shareholders turn? They would turn, possibly, to the Nuclear Installations Inspectorate, a public body with some degree of supervision. If they did not go there, they would go to the company. But it is the company that is involved in the operation that is causing them concern. Public accountability means that the shareholders can turn to a publicly elected body such as Parliament and raise questions, either written or oral, or through other means known to hon. Members. That is public accountability. We can turn the spotlight on something far more effectively if it is in public ownership because it is publicly accountable. In this industry, that is a most important and crucial element.
I am concerned about the atomic energy industry. I am not a supporter of further development of atomic energy generation. One of the tiny consoling factors about atomic energy in this country is that it is located in the public domain and is, therefore, accountable to the House and the public at large. Clause 1 drives a coach and horses through a number of statutory requirements that the Atomic Energy Authority has to supervise. If the Secretary of State says that selling off a company is in the national interest, that is a decision for him. He has the power so to do, but it is lamentable that that should be so. He is given powers that are far too wide.
The Secretary of State does not have to come to the House for an order. All that he needs to say is that, in his view, the decision is in the public interest. That is a complete erosion of democracy, in the interests of a tiny number of shareholders making a profit or receiving a dividend from a profit that has been made. I very much regret the introduction of the Bill.
I wish to refer to the Radiochemical Centre Ltd. Selling off sections of the atomic energy industry is one thing but selling off a specific company should also be considered. I regret that I did not hear the Minister's comments. I was chairing a Select Committee at the time. I cannot, unfortunately, be in two places at once, much as I should like to be. The Radiochemical Centre Ltd. is highly successful. There is no provision whatever in this legislation for protection against multinationals and international competitors buying into this sphere. There has been reference from the Conservative Benches to the need for limitations, and I agree with that. Presumably, however, the sale of any shares will be subject to the usual company legislation. That legislation does not give sufficent access to nominee shareholding to enable us to determine precisely the purchasers of any given block of shares.
There is no provision in law at the moment to ensure that this company, with a department at Harwell, can be retained even if one accepts the notion "All right, it is going to private enterprise, but let us keep it British". Even then there is no protection. An international purchaser will not only get the company; it will also get a channel into the heart of our atomic energy industry because of the connections of Radiochemicals Centre Ltd. with such areas as Harwell. The difficulties are real. A similar argument was not answered with regard to British Aerospace when we raised the matter on the Bill that is now an Act. The same is true now. There is insufficient protection against purchase by foreign nominees who wish to buy into our international atomic energy industry. I turn to another aspect.
A few years ago the House passed the Atomic Energy Authority (Special Constables) Act which recognised the special and dangerous characteristics of atomic energy. We gave Atomic Energy Authority constables the power to carry arms in pursuit of people who they thought intended to interfere with fusionable and fissionable materials. That was an indication of the concern felt about atomic energy. The materials are dangerous in themselves. They are more potentially dangerous than any material that we possess because of their use in fusion and fission processes. To what degree will that security be protected in the future? The Bill does not make that clear. It is a real cause of concern.
The Radiochemical Centre Ltd. is successful. The staff, by and large, are content with their status as a public sector concern. Why disturb them? Why not leave a public sector organisation that has a good turnover and provides a public service in the provision of radio isotopes, medicines and a wide variety of applications? It is a public service. It is accountable. It is a serious, potentially highly dangerous area of activity that is best kept in the public sector.
All in all, the Bill will do no good. Public ownership actually protects. Dunlop, a large British-based multinational company, was recently the subject of takeover bids in international share dealings on international stock exchanges. Dunlop was so worried that it met a group of hon. Members from both sides of the House. It could do


little to protect the drift away from control in this country, which could spell serious difficulty for the many thousands of people who work for Dunlop in the United Kingdom.
If shares are floated internationally, and if ownership goes abroad, very little protection can be offered to prevent the slow erosion of the shareholding, leading to the building up of a majority purchase. A final purchase may be prevented by the Industry Act 1975, which contains provisions to prevent the removal of the ownership of a company from this country if the Secretary of State for Industry believes that removal of such ownership would be against the national interest. Has the Minister consulted the Secretary of State for Industry about the matter? Is he prepared to use the powers in the 1975 Act if a situation is reached where he thinks that foreign ownership threatens control of this company? That is something that we would very much like to know.
I hope that from this oak panelled Chamber the message will go out that we are talking about a part of the public sector that is successful. It is buoyant, it is developing and it is providing a useful and important social service. It employs hundreds of people who are satisfied to be in the public sector, yet the Tories are selling off this concern because they detest the public sector and want to see it fail. Where it is successful, they are prepared to hand it over to their friends for what they fondly imagine are rich pickings. Let them beware. The Labour Party's policy is renationalisation without compensation. Any potential share purchasers had better bear that in mind.

Mr. John H. Osborn: "Renationalisation without compensation" epitomises the dogma that still divides Britain. I begin my speech with those words in mind.
The debate reminds me of one that I listened to in the early 1970s when the then Minister of Transport, my right hon. Friend the Member for Yeovil (Mr. Peyton), decided to withdraw Thomas Cook from the clutches of British Rail. I have not re-read that debate today, but all the arguments as to why Thomas Cook should not go into the market place were deployed at that time. It is 10 years after the event, 10 years after the first denationalisation party celebration that I was able to attend in the Minister's office, and Thomas Cook in its new form is more vigorous and more effective now that it is outside the clutches of the State.
Clause 1(5) contains some important references. It states:
Where a disposal by the Secretary of State would in his opinion be inconsistent with promoting or controlling the development of atomic energy, the disposal may only be made if in his opinion it would promote the national interest.
Many reservations have been expressed by the hon. Member for Keighley (Mr. Cryer). I hope that my hon. Friend the Minister will spell out how the Bill's provisions will be operated in practice.
When I read the Bill, I asked myself, bearing in mind the previous experience, "Is the Bill bold enough?" There are many problems in the energy industry that should be tackled. We have had a useful debate on when the State should and should not be involved. The hon. Member for Bristol, North-East (Mr. Palmer), for whom I have respect in his involvement in the Select Committee on Science and

Technology, asked, "If it is successful, why should we sell it?" The hon. Member for Rother Valley (Mr. Hardy), in a speech dealing with many issues, said that we should leave well alone.
Surely, the State, the banks and the institutions should devise means to assist something that is new, but once something is successful, the State, and especially the banks, should withdraw and let the entrepreneur take over. There has been a debate on the extent to which the State should control health and safety at work. I hope that my hon. Friend will assure me that State supervision of safety in this area will continue and that there is no question of it not continuing. That is an issue entirely unrelated to the one with which we are dealing.
I remind the House, that we are dealing with the Radiochemical Centre Limited, which had group sales of over £41 million last year, of which £34 million were overseas sales. It has assets of nearly £34 million and it has about 1,900 employees. The British Nuclear Fuels Ltd. operation has a turnover of £283 million, net assets of £393 million and employs over 14,000. That is the scale of the operation. Obviously, we are dealing with the smaller part of the industry.
It seems sensible, as my hon. Friend the Minister said, to reduce the size of the public sector because of the public sector borrowing requirement. It is even more sensible that the proceeds should go to put into balance the Consolidated Fund. Over the past 25 to 35 years, Conservative Governments have found themselves the caretakers of the legacies, of the follies, of previous Socialist Governments.
A feature of the debate has been the statement that is likely to be made about further funds going to the steel industry. Perhaps it will be £1 billion as against £30 million. The write-off is £3,000 million. Even the possibility of giving a face-saver of £100 million to the steel industry indicates how large a Conservative Government's expenditure has to be in one area and how small is the sum that will flow back as a result of the Bill.
The hon. Member for Merthyr Tydfil (Mr. Rowlands) makes me wonder whether his approach is that of a Left-wing Marxist or a Social Democrat. Having spoken to Social Democrats in France, Germany and elsewhere, some of whom have been Members of the European Parliament and others in the Council of Europe, it is clear that they do not believe in excessive State involvement or the corporate State. For instance, the corporate State is anathema to Social Democrats in Germany.
When the hon. Member for Rother Valley commented on taxpayers' funds, I had in mind the fact that last night, but for our whipping, I would have spoken to the life insurance and pension managers of Sheffield and South Yorkshire. They gave me papers and material that indicated their concern that pension and life insurance funds should be invested in the wealth-creating activities and assets of tomorrow. I had to comment that they would not have access to the North Sea oil and nuclear industries and that they would not be able to invest the pension funds of those employed in agriculture, industry and commerce throughout the country in those sectors, because the State is there already and drawing in the taxpayers' money. I shall not elaborate on the speech that I did not make last night, but the points are relevant to my intervention in the speech of the hon. Member for Rother Valley.
When the Japanese developed their free enterprise system and their concept of consortia, which many of us


have had a chance of seeing, their concern throughout was to put the savings of ordinary people directly into industrial wealth-creating activity without channelling it through the grubby hands of the State. The tragedy that has happened in Britain is that the State has been the funnel through which the funds of private individuals have been poured to finance the activities of the State. The State, including the Select Committees—members of the Select Committee on Energy have participated in the debate—have not been able adequately to monitor this method of handling the funds of private individuals. Therefore, it is better to find some way of enabling private funds to go into activities of the sort that we are discussing and to put those funds into activities that are successful rather than trying to draw them into unsuccessful activities.
The Bill is a move in the right direction and I have no hesitation in supporting my hon. Friend the Minister in putting the Bill before the House. It is a small step in the right direction, and with BNOC and other organisations in mind, I hope that my hon. Friend will be more courageous next time.

Mr. Peter Viggers: I am pleased to be able to give my wholehearted support to the Bill and to the Minister.
I yield to no one in my respect for the House of Commons, but there are certain limitations on its ability. One is that it should not run a company that is responsible for the manufacture of radio isotopes. Ultimately any company that is owned by the State has the House of Commons as its court of appeal. Ministers who are responsible for taking decisions are subject to political pressure, and such political pressure does not lead to good business decisions. Therefore, I applaud the movement of this company from public control to control that is equally public but which is channelled through private funds. In marketing and entrepreneurial matters, there is no substitute for private enterprise. Neither Whitehall nor Westminster has the ability to run a company in a proper and economic manner.
One point of advantage is that it will now be possible for the company to introduce share incentive schemes that will give real shares and incentives to the workers in the company. In theory, it is possible for any company, public or private, to introduce such schemes, but it has been found that it is necessary to have a Stock Exchange listing in order to value the shares, for the share options to work well and for the individuals within the company to see the value of the shares that they have been given. For that reason, it is important that the company should be listed.

Mr. Dalyell: A Stock Exchange Listing is all very well, but some companies, such as ICL today, may deeply resent being ludicrously underrated on the Stock Exchange, with all the difficulties that that causes.

Mr. Viggers: Indeed, there are fluctuations in value on the Stock Exchange, and British companies are substantially under-valued. However, the individuals who hold the options have the timing in their hands, and they can decide when they wish to take the benefit of the options.
Had I been called to speak earlier, Mr. Deputy Speaker, I would have given a paean of praise to the Bill, and I hope

that the Minister will not think that I am seeking to carp by picking up one point. I hope that it will be taken in perspective in my support for the Bill. Many people, both inside and outside the House, would like to know more about the manner in which we are to ensure that the control of the centre will remain within the United Kingdom. It is one thing for the Dorchester hotel to be acquired by people living outside the United Kingdom, but it is another matter for a company that has such central significance to the United Kingdom economy—a company that manufactures isotopes—to be potentially controlled outside the country. A British company is British because its workers are British, its ownership is British and its control is British. I have no doubt that the workers will remain British and that the control, in the safety sense of radioactive matters, will remain British.
If ownership is not to be within the United Kingdom, there will be something missing from the company. I share the views of those who expressed concern that the workers in TRC should feel that they are working for themselves and for the country, and that the control should not drift away. It has been possible to find a way of controlling the ownership in British Aerospace. However, I am particularly concerned, because even such a magnificent company as British Aerospace is valued at only £300 million, which is not very much in terms of the international cash flow of oil and gas magnates in Middle Eastern countries and elsewhere. It is important that we should not allow our British assets to be picked up at low rates by bodies outside this country.

Mr. Rowlands: With the leave of the House, Mr. Deputy Speaker, I should like to respond to this interesting debate, which has been dominated to an extent by references to dogma and doctrine.
I should like to comment on areas of agreement. First, it is agreed that there is a need for clarification of the 1971 Act. We would support any Bill that clarifies that Act. Secondly, it is agreed that the Bill is principally concerned with the power of the Secretary of State to be able to sell the whole or the majority of the shares in TRC. Thirdly, it is agreed that the story of TRC is one of success, dedication and dynamism by skilled and professional people.
There is certainly a measure of disagreement on the point raised by the hon. Member for Derbyshire, South-East (Mr. Rost) that the men from the Ministry are running all over the company and that the company could have had better commercial and technological skills. From all the evidence that is available, we know that the company has been extremely successful, has promoted its products and has gained major markets in this country and overseas. We are talking about a wonderful success story of a company that is 100 per cent. Government owned.
There is not very much disagreement about exploring further the possibility of employees having a share in the company. The 1971 Act, clarified by this Bill, would allow the Government to encourage employee participationin the company, without the Government relinquishing their majority control.
It is also undisputed—I hope that the Minister will confirm it—that the overwhelming majority of the staff at TRC would like the Government to maintain a majority control in the company. That is the simple statement that is cautiously presented by the staff and workers of TRC.
It would still leave wide opportunities for a minority shareholding to be sold off to private investment if necessary, and to encourage employee participation.
The major difference, which is practical rather than dogmatic or doctrinaire, is that all Labour Members have said that we should leave well alone, and that the people who created the success should be left to get on with the job. They should be given full support.
If the Minister is not willing to amend the Bill in the way that I suggested, which would create a consensus—I judge from his remarks and from those of the zealots behind him that he is not—we have to conclude that the argument from the Conservative Benches is that if a company is successful it is a crime, and that it must then be sold. The reason why it must be sold is that no evidence must be left to show that public enterprise works and is profitable. Unless the Minister offers some assurances, we shall oppose the Bill.

Mr. Norman Lamont: Before I turn to the question of TRC, Mr. Deputy Speaker, I should like to reply to my hon. Friend the Member for New Forest (Mr. McNair-Wilson). Since it was in order for him to put the question to me, I imagine that it is in order for me to reply to that question. What I say to my hon. Friend, briefly, about the fast reactor is simply that this is something that we are actively considering. We do not expect to be in a position to make any announcement for some months. But we do not share the view, which I know my hon. Friend put in the debate a few weeks ago on energy prices, that it would make sense to jump straight from thermal reactors now to the fast reactor, and we foresee a continuing need for thermal reactors in this country. I am afraid that that is all I am able to say at this stage in reply to my hon. Friend's question.
I had hoped and, indeed, rather expected that this Bill might have been not a very controversial measure. I thought that there might have been even a measure of agreement and interest from the Opposition. I was a little surprised to hear wild phrases. I think that I even heard the phrase "the erosion of democracy" thrown in from the hon. Member for Keighley (Mr. Cryer).
The hon. Member for Merthyr Tydfil (Mr. Rowlands) talked about the fears of those who worked in the company. At times, it seemed as though he was doing his very best to stir up those fears, rather than doing what I think we in this House should do, which is to reassure those people, because the Government have the future of the company and of those who work in it very much at heart. We do not believe that what is proposed in the Bill will in any way endanger the company's future or the livelihoods of those who work in it.

Mr. Dalyell: May we be clear on this point? What does the Minister think that the staff at Amersham actually said to him about the issue? Does he believe that they agreed to it?

Mr. Lamont: When the hon. Gentleman made his speech he accused me of misrepresenting the views of the staff at Amersham, because when replying to a specific question from my hon. Friend the Member for Gosport (Mr. Viggers) about shares for employees I referred to the fact that the staff at Amersham had raised that matter with

me. But I did not say—I am sure that my hon. Friends will bear me out—that that was all that they had said to me. In my speech, I specifically referred to the fears—in my view, groundless, unnecessary and unfounded fears—and the anxieties of people who worked in the company. I know that the view of the staff and the trade union people is that it should not be a majority of shares that is sold off. I am not making any pretence that it is otherwise, but I am sticking to my argument that fears on those grounds are not well based.
The hon. Member for Rother Valley (Mr. Hardy) asked what the proceeds from a sale of TRC would be. He did a rough back-of-an-envelope calculation. He worked out that the new plant near Cardiff was worth so much; there had been so much invested elsewhere; so therefore, on a back-of-an-envelope basis, TRC must be worth about £150 million. There are such things as loans to be taken into account. The Cardiff plant was financed out of loans and those loans would remain with whoever were the new owners of the company.
I am afraid that I cannot give a precise answer about the valuation of the company. Quite apart from the fact that this would be a matter for negotiation and a matter on which there would be many views, the price for the company is bound to be based on its profits in the past, its record—which has been very good—and the prospects for the future. It is also bound to take into account what the hon. Member for Keighley said tonight—that a future Labour Government would renationalise the company without compensation. That is bound to be taken into consideration. The price for the company must be based on its track record.
My hon. Friends the Members for Enfield, North (Mr. Eggar) and for Gosport made their views very clear when they said that they felt there should be employee shareholdings. For that reason, they very much favoured the route of the Stock Exchange flotation, because that would enable people to participate in the shares of the company. Certainly we shall bear that very powerful point very much in mind, although I must say, as I said in my opening speech, that as regards the method of sale no decision has yet been made by the Government.
The hon. Member for West Lothian (Mr. Dalyell) asked about my talks with the trade union people at Amersham. I said to them what I am saying to the House now—that no decision on this matter had been made; that I was quite prepared to talk to them again about it; that we would not take steps which would jeopardise the company's future; and that I would be fully prepared to take their views into account and to have further talks with them.
The hon. Member for Merthyr Tydfil also asked how the sale would affect the public sector borrowing requirement. It is right, as he said, that the company's borrowings do not count towards the PSBR, other than some loans from the Consolidated Fund, and those loans, by being repaid, will reduce the PSBR, and the proceeds from the company go towards reducing the PSBR.

Mr. Rowlands: I appreciate that the Minister is anwering the points, but, if he has left the question of the future and who might purchase the company, will he at least give an assurance for which all hon. Members have asked—that every effort will be made to ensure that this company is not bought by companies outside the United Kingdom? That has been the unanimous request from both sides of the House.

Mr. Lamont: I was intending my remarks to be a reply to that. I assure the hon. Gentleman that that view will be taken fully into consideration, because it has been expressed strongly on both sides of the House.
There was some confusion on the question of how much intervention there had been by the Government in this company. I did not wish to give the impression that the Government had intervened in the detailed day-to-day business of the company. The Government have not done that. But it is a fact that a certain amount of time of management is taken up by having to submit a corporate plan and investment plans, and a certain amount of time is taken up in Whitehall. That is not a good thing. There is always the possibility of interference on pay negotiations, for example.
Through speaking in debates on nuclear power, I have learnt that no subject is more surrounded by mythology and demons. Despite the fact that the Radiochemical Centre is not actually a company that operates in the field of nuclear power, before the debate I took a bet with someone that there would be bound to be a speech in the debate which misrepresented the Bill and said that what we were doing was lowering the standards of safety around nuclear power stations, and that someone would say that we were putting at risk the safety of the public because of nuclear power. I took a bet that it would be the hon. Member for Truro (Mr. Penhaligon) who would say that—and he did.
The hon. Member for Truro even managed to drag in Three Mile Island. As my hon. Friend the Member for Enfield, North pointed out, Three Mile Island nuclear power has nothing to do with the provisions that affect the radiochemical company in the Bill. The Radiochemical Centre is not part of the atomic power industry. It is owned by the Atomic Energy Authority. It is a spin-off from it.

Mr. Palmer: Will the Minister clear up the point about whether the Bill covers the National Nuclear Corporation? I should have thought that any readjustment of the shareholding there would not require legislation. If it is intended to cover the NNC, this would be of some interest in the City of London at present.

Mr. Lamont: As my hon. Friend the Member for Bedford (Mr. Skeet) pointed out, the Bill refers to the National Nuclear Corporation but it refers to that corporation in precisely the same way as it to refers to British Nuclear Fuels. It is not altering the position as it was thought to be. It was always thought that the Government had the powers to sell shares, both in BNFL—up to 50 per cent.—and in the NNC. But, as I explained in my opening speech, the Government have received legal advice that the Government do not clearly have the power to sell shares in those two companies. All that the Bill is doing, as regards both BNFL and the NNC, is clarifying the position and putting it back to what everyone originally thought it was.
In reply to the hon. Member for Truro, I stress that we are leaving the prohibition on selling more than 49 per cent. of the shares of BNFL. If the Government wish to sell more than 49 per cent. of the shares, we shall have to introduce a specific measure. My hon. Friend the Member for Sheffield, Hallam'(Mr. Osborn) asked about the safety of nuclear power stations and installations. Their safety is entirely unaffected by the Bill.
The hon. Member for Keighley suggested that selling shares in TRC would give foreigners access to our nuclear

power technology. That is fantasy of the highest order. I must say that I admired the hon. Gentleman's style. I could not have done it. He managed to speak—for reasons that he explained—although he had not been in the Chamber earlier. The hon. Gentleman has misunderstood the Bill. It will not affect the atomic power industry in the way that he believes.
As the hon. Member for Merthyr Tydfil said, TRC is very successful. Conservative Members have asked why the company should remain in the public sector. A company with such a history of success should be allowed the freedom of the private sector. It is doctrinaire and dogmatic to say that the company should for ever remain in the public sector. Even the Labour Government envisaged that shares in TRC would be sold. It is extraordinary that the hon. Gentleman should say that we should not sell shares in a company that is successful. I assume that the hon. Gentleman means that we should sell only the shares of companies that make losses. That will not get us far. As my hon. Friend the Member for Bedford said, that seems to be an argument for nationalising everything and for turning the Government into an investment trust. Indeed, it is an argument for nationalising ICI.
That is not the route that we want to take. We are committed to reducing the public sector. We believe that the Bill will benefit TRC. There is no reason why those who work in that company—on either the management or union side—should fear the future. The introduction of private capital can only benefit the company. Therefore, I urge my right hon. and hon. Friends to support the Bill.

Question put, That the Bill be now read a Second time.

The House divided: Ayes 181, Noes 136.

Division No. 67]
[7.2 pm


AYES


Adley, Robert
Cranborne, Viscount


Aitken, Jonathan
Critchley, Julian


Alexander, Richard
Crouch, David


Ancram, Michael
Dean, Paul (NorthSomerset)


Arnold, Tom
Dorrell, Stephen


Atkins, Robert(PrestonN)
Douglas-Hamilton, LordJ.


Atkinson, David(B'm'th, E)
Dover, Denshore


Baker, Nicholas(NDorset)
du Cann, Rt Hon Edward


Bell, SirRonald
Dykes, Hugh


Bendall, Vivian
Eyre, Reginald


Bennett, SirFrederic(T'bay,)
Fairgrieve, Russell


Benyon, Thomas('T'bay)
Faith, Mrs Sheila


Berry, Hon Anthony
Fenner, Mrs Peggy


Best, Keith
Fisher, SirNigel


Biggs-Davison, John
Fletcher, A. (Ed'nb'ghN)


Blackburn, John
Fletcher-Cooke.SirCharles


Boscawen, HonRobert
Fookes, Miss Janet


Braine, SirBernard
Forman, Nigel


Brinton, Tim
Fowler, Rt Hon Norman


Brooke, Hon Peter
Gardiner, George(Reigate)


Brotherton, Michael
Garel.Jones, Tristan


Brown, M. (BriggandScun)
Glyn, Dr Alan


Bryan, SirPaul
Goodhart, Philip


Budgen, Nick
Goodlad, Alastair


Bulmer, Esmond
Gorst, John


Butcher, John
Gow, lan


Carlisle, Kenneth (Lincoln)
Gower, SirRaymond


Carlisle, RtHonM.( R'c'n)
Greenway, Harry


Chapman, Sydney
Grieve, Percy


Churchill, W.S.
Griffiths, Peter Portsm'thN


Clark, Hon A. (Plym'th, S'n)
Grylls, Michael


Clark, Sir W. (Croydon S)
Hamilton, Hon A.


Clarke, Kennetn(Rushcliffe)
Hampson, DrKeith


Cockeram, Eric
Hannam, John


Colvin, Michael
Haselhurst, Alan


Cope, John
Hawkins, Paul


Corrie, John
Hawksley, Warren






Heddle, John
Porter, Barry


Henderson, Barry
Prentice, RtHon Reg


Higgins, Rt Hon Terence L.
Proctor, K. Harvey


Hogg, HonDouglas(Gr'th'm)
Rathbone.Tim


Holland, Philip(Carlton)
Renton, Tim


Howell, Rt HonD. (G'ldf'd)
RhodesJames, Robert


Hunt,John(Ravensbourne)
Rhys Williams, SirBrandon


Hurd, HonDouglas
Ridley, HonNicholas


JohnsonSmith, Geoffrey
Rifkind, Malcolm


Jopling, RtHonMichael
Roberts, M. (Cardiff NW)


Kaberry, SirDonald
Rost, Peter


Kershaw, SirAnthony
Sainsbury, HonTimothy


Kimball, Marcus
Shaw, Giles (Pudsey)


Lamont,Norman
Shaw, Michael(Scarborough)


Lang, Ian
Shepherd,Colin (Hereford)


Langford-Holt, SirJohn
Shepherd, Richard


Lawrence,lvan
Sims, Roger


Lee, John
Skeet, T. H. H.


LeMarchant, Spencer
Speller, Tony


Lester Jim (Beeston)
Spence,John


Lloyd, Ian (Havant&amp; W'loo)
Spicer, Jim (WestDorset)


Loveridge, John
Squire, Robin


Luce, Richard
Stainton, Keith


Lyell, Nicholas
Stanbrook, lvor


Macfarlane, Neil
Steen, Anthony


MacGregor, John
Stevens, Martin


MacKay, John (Argyll)
Stewart, lan(Hitchin)


McNair-Wilson, M.(N'bury)
Stewart,A.(ERenfrewshire)


Major, John
Stradling Thomas,J.


Marlow,Tony
Taylor, Teddy (S'endE)


MarshallMichael(Arundel)
Tebbit, Norman


Marten, Neil(Banbury)
Temple-Morris,Peter


Mates, Michael
Thomas, Rt Hon Peter


Mather, Carol
Thompson, Donald


Maude, Rt Hon Sir Angus
Thornton, Malcolm


Mawhinney, DrBrian
Trippier, David


Maxwell-Hyslop,Robin
Viggers, Peter


Mellor, David
Waddington, David


Meyer, Sir Anthony
Wakeham, John


Miller,Hal(B'grove)
Walker-Smith, Rt Hon Sir D.


Mills, lain(Meriden)
Wall, Patrick


Moate, Roger
Waller, Gary


Moore, John
Ward, John


Mudd, David
Warren, Kenneth


Murphy, Christopher
Watson, John


Myles, David
Wells,Bowen


Needham, Richard
Wheeler, John


Nelson, Anthony
Whitelaw, Rt Hon William


Osborn, John
Wickenden, Keith


Page, John (Harrow, West)
Winterton, Nicholas


Page, Rt Hon Sir G. (Crosby)
Wolfson, Mark


Page, Richard (SW Herts)



Pattie.Geoffrey
Tellers for the Ayes:


Pawsey, James
Mr. Tony Newton and


Percival,Sirlan
Mr. Selwyn Gummer.


Pollock,Alexander



NOES


Allaun, Frank
Cowans, Harry


Alton, David
Craigen, J. M.


Archer, Rt Hon Peter
Crowther, J. S.


Ashton, Joe
Cryer, Bob


Atkinson.N.(H'gey)
Cunliffe, Lawrence


Beith, A. J.
Cunningham,G.(lslington S)


Bennett,Andrew(St'kp'tn)
Dalyell.Tam


Bidwell,Sydney
Davidson,Arthur


Booth, RtHonAlbert
Davis, T.(B'ham,Stechf'd)


Callaghan,Jim(Midd't'n&amp;P)
Deakins, Eric


Campbell-Savours, Dale
Dixon, Donald


Canavan, Dennis
Dormand, Jack


Carmichael, Neil
Duffy, A. E. P.


Carter-Jones, Lewis
Dunwoody, Hon Mrs G.


Clark, Dr David (S Shields)
Eastham, Ken


Cocks, Rt Hon M. (B'stolS)
Edwards, R. (W'hampt'nSE)


Concannon, RtHon J. D.
Ellis, R. (NED'bysh're)


Conlan,Bernard
Evans, John (Newton)


Cook, Robin F.
Ewing,Harry



Fitch, Alan
Newens, Stanley


Fletcher,Ted(Darlington)
O'Neill,Martin


Foot, RtHon Michael
Palmer, Arthur


Forrester, John
Park, George


Foster, Derek
Parker,John


Foulkes, George
Pavitt, Laurie


Garrett, W. E. (Wallsend)
Penhaligon, David


Gilbert, Rt Hon Dr John
Powell, Raymondf(Ogmore)


Ginsburg, David
Prescott, John


Gourlay, Harry
Race, Reg


Grant, George(Morpeth)
Roberts, Albert(Normanton)


Grant, John (IslingtonC)
Roberts, Ernest (Hackney N)


Grimond, RtHon J.
Roberts, Gwilym(Cannock)


Hamilton, James(Bofhwell)
Robertson, George


Hamilton, W.W.(C'tralFife)
Rodgers, Rt Hon William


Hardy, Peter
Rooker, J.W.


Harrison, Rt Hon Walter
Roper, John


Haynes, Frank
Ross, Ernest (Dundee West)


Heffer, Eric S.
Ross, Stephen (Isle of Wight)


 Henderson, Barry
Rowlands, Ted


Hogg, N.(EDunb't'nshire)
Sever, John


Hooley, Frank
Sheerman, Barry


Howells, Geraint
Sheldon, Rt Hon R.


Hughes, Mark(Durham)
Silkin, Rt Hon S.C. (Dulwich)


Hughes, Roy (Newport)
Skinner, Dennis


Janner, HonGreville
Soley, Clive


Jay, Rt Hon Douglas
Spriggs, Leslie


Johnson, James (Hull West)
Steel, Rt Hon David


Jones, Barry (East Flint)
Stewart, Rt Hon D. (W Isles)


Kerr, Russell
Stoddart,David


Lambie, David
Stott, Roger


Lamborn, Harry
Summerskill, Hon Dr Shirley


Lamond, James
Thomas, Dafydd(Merioneth)


Leighton, Ronald
Thorne, Stan (PrestonSouth)


Lewis, Arthur (N'ham NW)
Tinn, James


Lewis, Ron (Carlisle)
Wainwright, E.(DearneV)


McCartney, Hugh
Wainwright, R.(Colne V)


McElhone, Frank
Welsh, Michael


McGuire, Michael(lnce)
White, Frank R.


McKay, Allen(Penistone)
Whitlock, William


McKelvey, William
Wigley, Dafydd


Maclennan, Robert
Willey, Rt Hon Frederick


McWilliam, John
Williams, Rt Hon A.(S'sea W)


Marks,Kenneth
Williams,SirT.(W'ton)


Marshall, D(G'gowS'ton)
Wilson, Gordon (DundeeE)


Marshall, DrEdmund(Goole)
Wilson, William (C'trySE)


Maynard, Miss Joan
Winnick, David


Millan, RtHon Bruce



Miller, Dr M. S. (EKilbride)
Tellers for the Noes:


Morris, Rt Hon C. (O'shaw)
Mr. Joseph Dean and


Morton,George
Mr. Donald Coleman.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — ATOMIC ENERGY (MISCELLANEOUS PROVISIONS) [MONEY]

Queen's Recommendation having been signified—

Resolved,

That, for the purposes of any Act of this Session to extend the powers of the United Kingdom Atomic Energy Authority and the Secretary of State with respect to the disposal of shares held by them ('the Act'), it is expedient to authorise—


(1)the payment out of money provided by Parliament of any increase attributable to the Act in—

(a)the administrative expenses of the Secretary of State;
(b) the sums payable out of money so provided under any other Act;

(2) the payment into the Consolidated Fund of any sums falling to be so paid by virtue of the Act.—[Mr. NormanLamont.]

Orders of the Day — Armed Forces Bill

Order for Second Reading read.

The Under-Secretary of State for Defence for the Army (Mr. Philip Goodhart): I beg to move, That the Bill be now read a Second time.
The primary purpose of this Bill is simple. It seeks to renew and to revise the provisions which determine the day-to-day legal framework within which members of all three Armed Services live their Service lives.
The Bill is brought forward, as the preamble to it makes clear, in order that the Service discipline Acts may be continued for a further five years. Its scope helps to ensure that, as far as possible, the rules that determine Service life reflect and keep pace with civil experience and practice.
It is now customary for Ministers when introducing or supporting these Armed Forces Bills to refer to the unusual nature of the procedures involved. In a similar debate five years ago, the hon. Member for Pontypridd (Mr. John), who now leads for the official Opposition on defence matters, referred to the 1976 Act as a "Brigadoon Bill", because this Bill, like the mythical Scottish village which inspired a successful Broadway musical comedy, appears occasionally but regularly in our parliamentary life.
I think that I would prefer to compare the procedure that we have adopted to a Naval refit. As every hon. Member present will know, our major warships are put into dry dock every few years to allow the experts to swarm all over the vessels to repair, modify and improve them.
In a roughly similar fashion, once every five years, we take the Army Act 1955, the Air Force Act 1955 and the Naval Discipline Act 1957 out of the legislative waters and let the experts swarm all over them, tapping here and prodding there, to consider whether any provisions need amendment, strengthening or scrapping.
In this whole process, hon. Members have a particularly important role to play, and here I am glad that we shall have the benefit of the formidable legal talents of the hon. and learned Member for Accrington (Mr. Davidson). If the Bill obtains its Second Reading, I propose to move that the Bill be sent to a Select Committee, as happened on the last occasion in 1975, and has, indeed, been the tradition since the enactment of the 1955 Acts. There would seem great advantage in the continued use of a Select Committee, rather than a Standing Committee, in view of the opportunity it gives the members of such a Committee to range widely over the whole field of Service discipline in addition to detailed scrutiny of the Bill itself.
Precisely because it is intended that this Armed Forces Bill, like its predecessors, should be the subject of detailed scrutiny at the Select Committee stage, I shall not weary the House in this debate with a full description of all the clauses contained in the Bill, many of which are highly technical. One such clause is clause 5, which permits an authority confirming or reviewing the sentence of a court martial to treat as not taken into consideration any offences which, in the opinion of that authority, should not have been taken into consideration at the trial. Another example is clause 9 which permits computer records to be produced in evidence in proceedings under the Army Act 1955 and Air Force Act 1955 in accordance with certain specified conditions which derive from the Civil Evidence Act 1968.
There will be ample time to discuss all those matters in Committee. Therefore I propose to concentrate on the more significant of the new powers proposed in the Bill and on certain recommendations made by the Select Committee which considered the last Act.
With regard to clause 10, hon. Members may recall that one of the most significant provisions of the Armed Forces Act 1976 was the establishment overseas of the standing civilian courts to hear cases where the accused were civilians liable to be tried under the Service discipline Acts.
The standing civilian courts approximate to magistrates' courts in England both with regard to the cases they may hear and the sentences at their disposal. The standing civilian courts are currently operating in Germany and a total of 285 individual cases has been heard by them in the three and a half years since they came into operation. Regular sittings of the standing civilian courts take place in Rheindahlen, Dusseldorf, Celle and Bielefeld and they are held in other locations as necessary.
As was foreseen, the standing civilian courts have proved particularly effective in dealing with juvenile offenders. I understand that civilians serving overseas generally see the establishment of the standing civilian courts as a distinct improvement on the previous system. Moreover, the Army and the Royal Air Force have also found that the new courts have worked well, and there have been savings in the administrative work load of serving officers now that the standing civilian courts are available to deal with cases which otherwise would have to be dealt with by court martial.
The opportunity has been taken in clause 10 and schedule 1 of making a number of amendments of detail to the existing provisions regarding the standing civilian courts. These amendments relate to the circumstances in which a social inquiry or other report may be provided on an offender, the manner in which a parent or guardian against whom a compensation order has been made may appeal against the order, a definition of "guardian" in relation to the powers of courts martial and the extension from 21 to 40 days of the time for lodging notice of appeal from the standing civilian courts to courts martial.
Schedule 1 also contains a further measure of some importance relating to civilians in that the maximum fine which may be awarded to a civilian following a summary trial is increased from £25 to £100. Although this may seem a rather large increase, in fact it does no more than bring the level of fines into line with increases in British courts since this matter was looked at in 1966. The power to fine civilians, subject to the Acts, in summary proceeding is now much less needed in areas where the standing civilian courts are operating, but there is an obvious need for it to be retained in other areas, such as the Far East. I should perhaps add that there is a considerable safeguard for civilians in the exercise of these powers in that the accused always has the right to elect to be tried by court martial in preference to being tried summarily.
Two important new powers are sought in clauses 13 and 14 with respect to the Service communities overseas. It is not, I think, always appreciated that, in addition to the 88,000 British Service men stationed overseas, there are also about 40,000 wives and 54,000 children living in Service communities abroad. The Service discipline Acts apply in a rather limited form to the families of Service


men resident with them at overseas stations and also to certain civilian support staff, who are attached to the Services.
Clauses 13 and 14 will provide legal powers for the protection of the mentally disturbed and of children considered to be at risk in Service communities overseas. I stress that this in no way reflects an upsurge of either mental illness or child abuse. As a matter of policy, problem families are not posted abroad. The new powers would need to be involved only a few times a year. Nevertheless, in communities of the scale that I have outlined, some cases will inevitably occur. Hitherto, we have relied on administrative powers to return such persons to the United Kingdom where they could be cared for according to United Kingdom civil legislation. However, we consider—and members of the 1976 Select Committee expressed the same view when hearing witnesses—that specific legal powers should be laid down regarding the action which can be taken in overseas Service communities before an individual can be returned to the United Kingdom. We have, therefore, put forward powers as similar as possible to United Kingdom civil legislation.
I should like now to turn to the retention of the death penalty and, in particular, to clause 17 of the Bill. The 1976 Select Committee on the Armed Forces Bill recommended in its report that the Ministry of Defence should review the need for the retention of the death penalty, particularly with a view to reducing the categories of offences for which it may be awarded. Under clause 17 the death penalty would not be retained as the maximum sentence for the offence of spying for an enemy on board one of Her Majesty's ships or within a naval establishment abroad. There is no equivalent to this offence in either the Army Act or the Air Force Act 1955. It is not felt necessary that the death penalty should be retained for this offence. The maximum penalty suggested is life imprisonment.
There are now five offences under the discipline Acts which apply to Service men and also to certain civilians which attract the death penalty. These offences relate to communicating with the enemy, obstructing operations, mutiny or incitement to mutiny and surrender of a place to an enemy without lawful excuse. I must emphasise that these offences attract the death penalty only when committed with specific intent to assist the enemy and that those found guilty of them may be sentenced to lesser punishments. I must tell the House that after a thorough review of these offences, we have concluded that the death penalty should be retained for them.
The offences in question are of the utmost seriousness since they could put in jeopardy the force to which the offender belonged and might well threaten the outcome of a battle or campaign. Those who commit such offences could put at risk not only the lives of their fellow Service men—possibly in very large numbers—but the survival of our country. Moreover, the death penalty may be thought the only effective deterrent for a potential offender on the battlefield who, like his comrades, may have to face death as a result of obeying orders and who, in consequence, is hardly likely to be deterred from assisting the enemy by the possibility of imprisonment.
In this respect we are in line with our major allies, the great majority of whom also retain the death penalty for

military and war-time offences, although in practice the use of the death penalty has largely disappeared from their ordinary criminal codes and practices. Four of the NATO countries have a greater number of offences attracting the death penalty than the United Kingdom. I am told that the Soviet military code contains no fewer than 16 separate military crimes punishable by death in time of war. I hope, therefore, that the House will accept that it is right to retain the death penalty in those circumstances.
If I might now move to a rather more agreeable subject, hon. Members will note that clause 20 is designed to complete the assimilation for the purposes of statute law of the women's Services. This will ensure that all statutory provisions applying to the Armed Forces generally apply in the same way to the women's Services.
The psychological impact of this particular announcement may be somewhat muted by the fact that the right hon. Member for Stockton (Mr. Rodgers) made a broadly similar statement when introducing the Bill in 1975. But even after the passage of that legislation, which included officers and ratings of the Queen Alexandra's Royal Naval Nursing Service and the Women's Royal Naval Service in the general definition of "Her Majesty's naval forces", there was still doubt whether references in other statutes to the Armed Forces generally or the naval forces in particular included the QARNNS and the WRNS in every case. The present clause is designed to put this situation beyond all practical doubt.

Dr. Alan Glyn: I congratulate my hon. Friend on his appointment. I am not quite clear about the clause. Am I right in assuming that the clause puts the women's Services on the same footing, both for punishment and for trial? But I presume that there is a difference, because the male Services are combatant and the female Services, I understand, are still non-combatant.

Mr. Goodhart: Broadly speaking, that is correct.
I turn to clause 24. The House will, I am sure wish to take note of the proposal to abolish the splendid office of Accountant General of the Navy. The Accountant General of the Navy is in fact an office—though there is no longer an officer—that was instituted before the Napoleonic Wars. Its former responsibilities included the Admiralty's spending generally, and the pay of the Navy in particular. However, its splendours and powers are long gone, as I understand that the actual post of Accountant General of the Navy as a separate entity was abolished in 1932 and that an MOD deputy secretary now performs the vestigial duties of the office, confined for the most part to the signing of documents under various trust deeds. Statutory references to the Accountant General of the Navy do, however, still exist and it is now proposed that these functions should be formally transferred to the Secretary of State.
The effect of clause 26 is to abolish the statutory requirement for Army pensions to be paid in advance. This proposal reflects a general tendency towards payment of benefits monthly in arrears which reduces administrative costs without causing any loss to the individual. I must stress, however, that the clause will not affect those currently receiving pensions paid weekly in advance. They will, unless they wish to change, continue to receive then-pensions on the former basis. I understand that many new Army pensioners already wish to receive their pensions in


the proposed way. I should also perhaps explain that the clause will put the Army on the same footing as the other two Services which are also proposing to pay future benefits on the basis I have outlined, although, in their case, no statutory authority is needed.
Inevitably, a debate such as this must concentrate on the penalties, summary proceedings and courts martial. Anyone listening to our past and present discussions on the discipline Acts might be forgiven for thinking that we face the same grave disciplinary problems that bedevil the armed forces of so many other countries, although the technical nature of so much of the Bill suggests that there is not too much wrong with our present balance.
Of course a legal code is important, but what really matters is self-discipline. The House can take legitimate pride in the conduct and self-discipline of our Forces. As hon. Members may be aware, I have spent much time in the past 20 months in Northern Ireland. I can testify to the general respect there for the good humour and restraint with which our soldiers have responded to the special strains there. I am sure that the whole House joins in recognising the debt that we owe to the men and women who protect our country.

Mr. Arthur Davidson: May I first congratulate the Under-Secretary on attaining his high office? I do so warmly because I have known him for a long time, and therefore I will dispense with the ritual of saying that I hope that he holds office happily for a short time—although I do.
As the Minister has said, the Bill is, to say the least, far reaching, as both its predecessors have been. Any Bill that encompasses almost as a throw-away, tucked away in clause 17, the abolition of the death penalty for the, one hopes, rare event of spying on board one of Her Majesty's ships or within a naval establishment by a civilian not subject to the Naval Discipline Act is a rare and unusual Bill. A Bill that also embraces, again tucked away towards the end of the Bill in clause 24, the abolition of that grand and exotic post of Accountant General of the Navy is an unusual Bill. The whole House will mourn the passing of that great official, but perhaps less so now that we have been told that he is not some uniformed grandee, as I have always supposed him to be, but a mere member of the Ministry of Defence, no matter how distinguished. That is not quite the same creature.
The Bill also makes a fleeting visit to the rarified and, for lawyers, profitable heights of the Patent Acts. It deals in a compassionate and humane way with the Mental Health Acts. I was pleased to hear the Minister say that the Mental Health Acts would be applied in the same way to military and civilian personnel serving abroad as they are here. That is long overdue.
I hope that the Minister will expand on the present system and treatment when he winds up the debate. On behalf of the Opposition, I welcome the Bill. Like its five-yearly predecessors, its aim is to ensure that, as far as possible, equality before the law has the same meaning for those subject to the rigours of military discipline as it has for the rest of the public and that the consequences of the operation of the law—the investigation process, the trial procedure, treatment and punishment—are brought into line with the change in penal policy and practice in the civilian code. The Bill carries on that tradition, and therefore I welcome it.
But just as ideas in penal policy change over the years, so, unhappily, does the incidence of particular crimes. I should like to ask the Minister one or two questions. He paid tribute to the behaviour and excellent discipline of the forces, particularly in Northern Ireland. The Minister is in a good position to speak about that. I should like to pay tribute also. However, regrettably, in what I might call the outside world, there has been an increase in the use of firearms in the pursuit of crime. In view of the obvious accessibility of firearms to military personnel I should like to know whether there has been a corresponding, or any, increase in the use of firearms in the course of crime by military personnel. Equally, there is evidence that there has been an increase in drink-related crime. The Minister will know that military personnel serving abroad have access to cheaper sources of alcohol.
Has there been an increase in drunkenness, or in crimes associated with drunkenness, and how are they dealt with by the military authorities? The Home Secretary shares the view that courts and prisons are not the proper places for those with a drink problem. Can the Minister tell us how those in military establishments who have a drink problem are treated and, particularly, whether there is any such problem in Northern Ireland where our forces face such severe strains and pressures?
I welcome clause 2, which enables juveniles to be treated in borstals or detention centres. The purpose is to bring their treatment into line with the treatment of juveniles by civilian courts. When considering whether to send a juvenile to a detention centre the court has the advantage of a social inquiry report well prepared by trained social workers. That is of benefit to the court in deciding what punishment to administer. Are there sufficient trained social workers to prepare such reports under military procedures, so that the courts do not act on insufficiently assessed reports prepared by people who are not skilled or trained? In other words, is there a proper back-up service on which the courts can base their recommendations?
The 1976 Act extended the summary powers of commanding officers to deal with certain offences instead of subjecting accused persons to the hardships, delays and shame of the court martial procedure, though they have the right to opt for that procedure if they wish. That was a sensible proposal, not only because it saved the time of trained court personnel, but because it ensured a greater degree of justice to the accused. How well has it been working? Have there been complaints from the Services or from defence lawyers about the procedure? Has there been much opting for the court martial procedure?
The Act did not increase the powers of naval commanding officers because it was felt that they already had sufficient powers. Is the Minister satisfied that those powers are still adequate? As so much of our Fleet now serves in home waters, is there any need for a change in the powers?
I was happy to hear the Minister say that the standing civilian courts, which were set up by the 1976 Act, have worked well. Instead of being tried by such a court an accused can opt for a court martial. Is there any inclination on the part of those who have that right to choose a court martial rather than a standing civilian court? Has there been any criticism by the Services of the fairness of the standing civilian courts?
Clause 7(2) proposes to add subsection (3A) to section 141 of the 1955 Act. It says:


The right of a person or his representatives to obtain a copy of the record under this section does not extend to so much of the record as relates only to a charge of which he was found not guilty.
Why is that necessary? In many respects, what happens on a related charge on which a different verdict is returned can be relevant to an appeal in respect of a charge on which a person is found guilty. It seems a rather petty whittling away of rights to include that subsection in what is otherwise a rather expansive, magnanimous clause. Why has a minimal right, but one which could be of great benefit to an accused person, particularly one who may be pursuing an appeal, been excluded from the proposed subsection?
I turn to a slightly more controversial area the Minister could not have expected the debate to remain placid throughout. We hear that the Government are considering military training in uniform as part of the youth opportunities programme. The Secretary of State for Employment has indicated that something like that is being discussed, and The Guardian has reported that the Minister is particularly enthusiastic about the proposal, though I do not know whether that is true
This is not the time to debate the rights and wrongs of such a scheme, but the matter is relevant, because if young jobless people are to be trained in uniform, we are entitled to ask how they will be affected by the military codes of discipline. Youngsters recruited into such a scheme and working side by side in uniform with military personnel will presumably be treated before the law in the same way as other military personnel. I should be interested to know the Minister's thinking on that important, if somewhat controversial, proposal.
The Minister complimented me on my expert legal knowledge and hoped that I would bring it to bear on the Bill. At some stage, I hope to do so. The House will be greatly relieved, however, to hear that I have not the slightest intention of doing so tonight. The Minister is clearly correct in submitting the Bill to a Select Committee, where the individual clauses, the reasons behind them and the thinking of the Aimed Forces on them can be explored in depth, and, where clauses dealing with the legal rules of evidence which are very complicated and technical, can and should be fully examined.
This is an important Bill, although it is relatively non-controversial. Compared with some of the great defence issues that will be debated on future occasions, it may appear fairly minor. But it is not a minor Bill at all, because it deals with the basic concept of civil rights and civil liberties and the way in which the law treats those who choose to serve in the defence of our country. Such a Bill should be searchingly examined and treated very seriously by the House.
In that spirit, I welcome the Bill, and I am sure that when it goes to the Select Committee it will be examined with the care that it deserves.

Mr. Clive Soley: I wish to put a few points and a couple of questions to the Minister. I begin by identifying myself with the views of my hon. and learned Friend the Member for Accrington (Mr. Davidson), who asked the Minister to give an assurance that the facilities available to a Service man in terms of

social work provision are no less that they would be in civilian life. It is a matter of ensuring that those standards are adhered to in military as well as in civilian areas.
I wish to develop a little further the point made by my hon. and learned Friend about alcohol abuse. He was absolutely right in saying that there has been an increase in the abuse of alcohol in this country generally and indeed in most Western nations. There is considerable evidence that, where there is easy access, the problem tends to be greater. That means that in places such as Germany where the price is relatively low in the NAAFI and elsewhere there is ready access to alcohol and there may easily be a problem.
I must declare an interest here as chairman of the Alcohol Education Centre. Figures show that the people who come on our courses are the professionals—psychiatrists, probation officers, social workers, GPs and so on. During the past five years, the greatest single number that we have had from the United Kingdom Armed Forces—I speak of all three Services, the Navy, the Army and the Air Force—has been two on our basic course, and the figure is not dissimilar for the advanced course.
The figure for other countries sending their personnel on our courses in one year rose to as great as seven. They are often United States and Canadian personnel, with the occasional Australian or West European. When one considers that all of those countries have their own courses and training yet still send people on our courses, it is clear that they take the problem rather more seriously than we are taking it at the moment.
I should like the Minister to give careful thought to that matter. I had been considering a series of parliamentary questions on this issue and may well pursue it in that way. I am concerned, first, that we should have sufficient personnel in our Armed Forces who are able to spot a developing problem and, having spotted it, to respond to it. Secondly, one is concerned about whether the level of alcohol abuse is a disturbing one, and, if so, in what parts of the world where our Armed Forces are serving. I wish to comment briefly on the relationship with the Mental Health Act. I wonder how many qualified psychiatrists are serving in areas such as Hong Kong and Cyprus—and, of course, Northern Ireland—where depression is likely to be highest, not least because depression is a fairly common illness throughout the country generally, but particularly because in those areas there is a problem of isolation, separation from family and a host of other factors which might induce a person already prone to depression to tip over into a full clinical depression. Again, therefore, I seek reassurance that we have sufficient qualified psychiatrists in the areas in which they are needed.
I should like to ask the Minister what I hope is a very simple question, although he may not have the answer readily to hand. Does the Rehabilitation of Offenders Act apply to people who have been through military discipline? In other words, does that Act apply to a person who has been through a court martial?

Clause 14 deals with
Temporary removal to and detention in a place of safety abroad of children of service families in need of care and control.
Where would they be removed to? If they were in Germany, it could be argued that the local authority social services department might have somewhere appropriate, although one would have to bear in mind that there would


be a language barrier for the child. In Hong Kong and Cyprus there are severe problems about where one would remove the child to. Needless to say, the problem can be just as serious in Northern Ireland, unless there is to be a major separation by bringing the child back to the mainland. I should therefore like some information on that.

I am sorry that the Minister did not take his courage in both hands and abolish the death penalty altogether. He is absolutely right in saying that the Soviet Union has that penalty for 16 separate offences in its armed forces, and indeed is far more prone to use it for civilian offences as well. I believe that in some significant way the existence of a death penalty is a measure of a society's standard of civilisation and sophistication.

I find it very difficult to envisage a situation in which it is likely that the death penalty would deter the behaviour that the Minister described. Indeed, I would challenge him to give examples of circumstances in which it might be used in our day and age. I put it to him that if a person in the front line is in danger of deserting, or abandoning or surrendering his position because of that, with bullets whistling around his ears, the last thing that he is likely to consider—and there are many examples of this—is the penalty that he will suffer if he is caught doing what he is doing. We are well aware from all kinds of other situations in the civil law here and in other countries that even the most terrible punishments do not deter certain forms of behaviour if the stress is high enough, and we are here speaking of a high stress situation.

Similarly, I find it hard to believe that an officer or a colleague will go up to the person who is offending in this way and say "Look here, old chap, if you leave this position now, you can be hanged when you get back to England". It just does not happen like that. It is far more likely that one of his mates will rush up to him, grab him by the throat and say, "You move from here, and I shall …" and then say various other things which I should perhaps not quote in this House—indeed, the imagination boggles.

Similarly, if the person was in danger of deserting before the enemy was in sight and this was being used as a threat, I suspect that one would be dealing with a person who was unable to cope with that threat and was probably already in a state of near—breakdown. I doubt very much whether any civilian court, or indeed with today's attitudes any military court, would be inclined to sentence that person to death after the event.

I therefore ask the Minister to think again on this, take his courage in both hands and abolish the death penalty altogether. It is unlikely to be used. We do ourselves no service by having such a penalty. I do not believe that it is a deterrent. When one considers that some West European countries have not used the death penalty for over 100 years, it is clear that we are behind the times in keeping this floating around in our legislation. Let us therefore have the courage to abolish it altogether. If I thought that it was likely to be used, I should seek to divide the House on the matter, but I cannot envisage a situation in which it would be used unless, as the words of the song would have it, we all go together when we go—and by that time it would be too late.

Finally—and this, again, may save the Minister being asked a parliamentary question—when I was in Hong Kong recently my attention was drawn to the question of pensions, and particularly pensions for Gurkhas. As I

understand it, what tends to happen is that the Gurkha, on retiring to Nepal, receives a pension which is in fact set up by an agreement reached among Britain, India and Nepal in 1947.

The problem is that if India increases the pension we apparently do not get to hear about it until some bright spark in Nepal shows us a copy of the "Indian News", or whatever, and says "Have you seen that pensions have been increased?". That slowly filters its way back to the pensions unit in Hong Kong which informs the people here and two years later the Gurkha gets his pension in arrears, just as the Minister is seeking permission to provide in the Bill.

Perhaps the Minister will look at that and see whether there is some way in which we can rationalise the situation so that people get their pension increases a little quicker than the two-year period would suggest.

8 pm

Mr. Keith Best: I do not wish to lengthen what has been such an amicable debate. I only hope that my intervention will not endanger the good relations that have hitherto existed on both sides of the House. I shall keep my remarks brief.
I wish to refer to two clauses, but before doing so I should like to congratulate my hon. Friend on his new appointment. We are all glad to see him in that position, and we know that he will bring a great deal of thought and care to his new post. We are all looking forward to working with him in his new role.
I refer my hon. Friend to clause 2(1), where one sees that under the proposed section 71AA a court shall have the power, instead of punishing an offender by sending him to prison,
to make an order … committing him to be detained in accordance with the provisions of this section for a maximum period to be specified in the order of not more than two years.
It goes on to say that the institutions in question are borstals and detention centres.
My hon. Friend will know that in the civilian criminal courts when an offender is sentenced to a period of borstal no time limit is set upon it. The sentence is for borstal training, and it is then left to the discretion of the assistant governor to decide the date upon which that person will be released, so long as it is for a minimum of six months. I do not know what discussions my hon. Friend has had with prison officers, but if the court were to specify a maximum period of, say, nine months, would that effectively remove the discretion of the assistant governor to release that person at an earlier stage? Alternatively, if he feels that that person has not fully completed the period of training that is best suited for him, does it mean that he cannot release him until after that period? It may well be that my hon. Friend has thought of this already. If not, I should like him to consider it carefully, because it seems to me that the clause is likely to remove the discretion of the assistant governor.
My other point relates to clause 6(3), which deals with the time limit for the commencement of proceedings. The new subsection says that no proceedings shall be taken against a person unless
the proceedings on the summary dealing with the charge are begun within three months".
Perhaps my hon. Friend will say what exactly is meant by "proceedings". I can envisage a situation in which it might well be difficult to ascertain the whereabouts of someone


within the three-month period. I am thinking in particular of members of the Territorial Army, who might well undertake their training in Germany at the 15-day annual camp, commit some form of solecism, or even worse, and disappear into the anonymity of civilian life. Their whereabouts may be difficult to discover, especially if they know that they have committed some offence while at the camp.
My second point relates to trials that are begun within six months. Again, that seems unequivocal, in that the trial must be begun within six months or the proceedings will fall. Has my hon. Friend contemplated the situation where, for a number of reasons, it might be difficult for a trial to be begun? One can appreciate that proceedings may be begun within six months, but this subsection states that the trial must be begun within six months.
From my own limited experience of practice in the civilian criminal courts, I know of the great difficulty of bringing a matter speedily to trial. There may be all sorts of difficulties, such as the attendance of witnesses and related matters. I should welcome my hon. Friend's comments on that aspect of the matter.

Mr. Ronald W. Brown: I should like to ask a question about clause 13. This is a new feature dealing with powers
in relation to persons under incapacity".
Why has this come about? It is a stringent introduction. Is there a great deal of history of members of the Armed Forces and other civilians who come under the control of the Armed Services suffering from mental disorders?

Mr. Douglas Hogg: General Gordon.

Mr. Brown: I was trying to be serious. I am rather surprised at the hon. Gentleman. I was trying to understand why this new provision has been introduced. It is often said of the Armed Forces that they are lacking in moral fibre due to various causes—first, mental disorder; secondly, alcoholism; and, thirdly, drug taking. Perhaps the hon. Gentleman will take this matter more seriously and ask why—

Mr. Hogg: Mr. Hogg rose—

Mr. Brown: The hon. Gentleman is a grossly rude and offensive fellow. I was about to say "Yes, of course I shall give way".

Mr. Hogg: I am grateful. The hon. Gentleman asked rhetorically whether we could think of any soldiers who suffered from some form of mental handicap, and I said General Gordon of Khartoum. We all know that he did.

Mr. Brown: Once again, the hon. Gentleman hardly gives himself time to listen. He sits there in his rather foolish form and listens, but it does not seem to click inside his brain and he comes out with the wrong answer. I did not ask him rhetorically whether General Gordon, or himself, or his family, were ever mentally ill. I was merely asking why clause 13 has come about, because it is a long and involved clause. I am anxious to know why it has come about. What has occasioned it?
I had taken the view that the clause gives a power to the commanding officer to call for two registered medical practitioners. However, if one is abroad, where does one find them? Will they be Service personnel? If so, I am

worried about the clause. Obviously, under pressure from the commanding officer, two medical officers serving within a unit could perhaps be pressured into declaring that a difficult individual was suffering from a mental disorder. Therefore, will the registered medical practitioners be Service personnel or will they be medical practitioners from the area in which the commanding officer is serving? Under subsection (7), when a commanding officer has gone through this enormous exercise—which presumably has been undertaken because the individual was a danger to himself or his unit—and when that individual has been treated and has returned to the United Kingdom, he cannot be detained for more than 24 hours. Perhaps the Minister will explain why this somewhat strong piece of legislation had been introduced. Is there protection for an individual who disagrees with a commanding officer, but who, according to the commanding officer, is suffering from a mental disorder? Why is it that he must be detained for 24 hours following his return to Britain? When a man is finally brought home, will he be a candidate for discharge immediately or will some other provisions allow him to be successfully treated and then returned to his normal service duties?

Dr. David Clark: I shall not detain the House for long, but not because we do not feel that the Bill is important—of course we do. I suspect that this is the sole occasion on which the Government and the Opposition will face each other across the Dispatch Boxes in such an amicable fashion about matters connected with the Armed Services. I do not intend to probe the Bill in great detail because we welcome the Government's proposal to place the matter before a Select Committee. We feel that that is the right place for the detail to be examined. We presume that any suggestions that might come from the Select Committee will be accepted by the Government, as has happened in the past. I hope that the Minister will reassure us on that point.
We regard the Bill as important. We take such matters for granted, as we take every good thing for granted, for example, fresh air. Although the Bill is technical, legal and highly complicated, it enshrines two basic principles that we so often take for granted, namely, the principle of the civilian control of the military, and the principle that, wherever possible, the rights of individual members of the Services must be as near as possible equal to the rights of the citizens at large in society. We accept that the rule of law under which we live must be modified slightly for those serving in the forces. Having said that, we believe that the quinquennial reviews give us the opportunity to enshrine in the military discipline codes, and in the Armed Services generally, the changes and patterns that have taken place in society.
I counsel the Government gently that we are concerned about the Accountant-General. Not so long ago, the Labour Administration were thankful for another ceremonial official—the Official Solicitor. I hope that demise of the Accountant-General for the Navy, if it comes about, will not mean that any unusual approach which any future Government might have to take will be removed. I presume that the Greenwich hospital pension fund will not in any way be affected by that move. I am sure that it will not be.
Part of the purpose of the quinquennial review is to bring the Armed Forces into line with movements and


patterns in society. We have seen that happen. I wish to develop a point hinted at by my hon. Friend the Member for Hammersmith, North (Mr. Soley) in relation to members of Armed Services who do not appear to be entirely covered by the Bill. Various clauses cover the reserve forces, the nursing services, the WRAC and the WREN, and so on, but nowhere does the Bill mention the Gurkhas or, more specifically, the Chinese personnel in the Army. There are many Chinese personnel serving in the Royal Navy, especially in the Far East, and the Gurkha battalions in the Far East, Belize, Brunei, and even in Britain on household duties. How are they affected by the Bill?
Is the Minister satisfied that the general trends and patterns that we have seen in society, and that we have tried to reflect in the Bill for our indigenous forces, are being reflected for people whom we might describe as non-indigenous? That is an important point. My hon. Friend the Member for Hammersmith, North raised a point about pensions, which come under clause 27. The point that he made about the Gurkhas is correct. Perhaps at a later stage the Minister will be prepared to review the whole procedure for their pensions, because they are not prepared on a computer but are prepared by hand in Hong Kong. It is a laborious process which needs to be reviewed. We should welcome an assurance about the Gurkhas and the Chinese personnel within our Armed Services.
My hon. and learned Friend the Member for Accrington (Mr. Davidson) mentioned the women's Services. The position has changed slightly—and I emphasise the word slightly—in the past six months, because for the first time we are training certain members of the women's Armed Forces to use small firearms. I appreciate that that is ostensibly for a self-defence capability, but does it in any way affect their role as covered in the Bill? It changes their status in the Armed Forces.
I must press the Minister on the point raised by my hon. and learned Friend the Member for Accrington about the scheme that the Opposition regard as ludicrous, namely, military training for the young unemployed. Not only is it ludicrous but, I feel, offensive. Does the Bill in any way cover youngsters in that position? Has the Minister given any thought to the proposal for military training in relation to the Bill? I understand that the Minister, by tradition, will not be a member of the Select Committee. However, will he seek to make certain amendments to the Bill to cover that proposal if such measures are introduced before the report of the Select Committee?
We do not often find ourselves in such an amicable position. We share the Minister's high regard for discipline in the British forces. We are fortunate in the high morale and discipline in the forces. The Bill seeks to ensure that our Armed Forces are not second rate citizens. Coupled with that, we should always try to ensure that when we ask our Armed Forces to do a certain job—I am sure that this is both our philosophy and the hon. Gentleman's philosophy—we should not ask them to do the most impossible tasks. When we ask them to do something, it must be done with the right equipment.

Mr. Goodhart: The debate has been short but in just over an hour many points have been packed in. I am grateful to the hon. Member for South Shields (Dr. Clark) for his kind words. I welcome him to our debates. He and the hon. Member for Hammersmith, North (Mr. Soley)

referred to the Gurkhas and other non-indigenous forces. The Gurkhas are full members of the Armed Forces. Their claims are unlikely to be treated lightly. For the first time we have a Secretary of State for Defence who was a regular officer in the Gurkhas. The Chief of the General Staff is also the colonel of the Gurkhas. It is unlikely that their claims will go unnoticed. I have noted what has been said about pensions.
The hon. and learned Member for Accrington (Mr. Davidson) asked about firearm offences. There is no increase of which I am aware to indicate an upward trend in such offences, fortunately. He and the hon. Member for Hammersmith, North were rightly concerned about drink problems. When a large number of young men are together, drink is a problem and it has traditionally been a problem in the Armed Forces, as Winston Churchill once pointed out in a memorable phrase. Drink is regarded as a problem in overseas stations only where it is duty free—in other words, in BAOR. Service commanders have grasped the problem and a comprehensive education programme has been instituted by each Service, including the showing of specially made films. Senior ranks are trained to recognise the symptoms of alcolholism, with a view to early treatment. The problem is under control. There has been no noticeable increase in drink-related crimes. One can note with a degree of relief that drug-taking, which afflicts some allied Armed Forces, is not a serious problem in our Armed Forces. We should be thankful for that.
The hon. and learned Member for Accrington also asked about reports on juveniles and whether they are as good and as competent overseas as they are in Britain. One cannot expect that always to to be so. I say that with a degree of knowledge since I have a daughter who is a probation officer and who makes reports about juveniles. I am sure that not all the reports on juveniles overseas are as good as those that she makes.
The hon. and learned Member asked whether our naval powers are adequate in relation to summary convictions. I am glad that he approached the question from that angle. I have said that the extra powers of naval commanders must be justified. I am glad that the hon. and learned Member supports that.
I am grateful to my hon. Friend the Member for Anglesey (Mr. Best) for his kind remarks. He referred to clause 6 and the reserve forces. They are the principal reason for clause 6. Under present legislation, on a number of occasions a summary trial has to take place on the day that the offence is committed. Justice is often dispensed more quickly in the Forces than in civilian life but it is stretching matters a little far to guarantee legal proceedings on the day that an offence is committed.
The hon. Member for Hammersmith, North referred to the retention of the death penalty. He suggested that the grounds on which the death penalty might be invoked could be abused in the heat of battle, where those concerned were unable to cope. I assure him that in every instance there has to be a motive of actively trying to help the enemy before one would seek to invoke that sanction.
A rare note of controversy was struck with reference to the possibility of training in the Armed Forces for the young unemployed. As the Secretary of State for Employment said in a written answer on 4 February, the Ministry of Defence


is considering what further help it might offer unemployed young people and we are in discussion with it about this."— [Official Report, 4 February 1981; Vol. 998, c. 138.]
No firm decision has yet been taken on that matter.
I remind the hon. and learned Gentleman that in the Armed Forces we have some of the best training establishments for young people in this country. At the moment they are not fully used. While on the subject of work experience or youth opportunities in the Armed Forces, I should point out that for many years there has been a short service limited commission scheme. A young man may come in for a few months and gain experience of the Army, before going up to university. He may be attracted by what he finds and may come back to the Armed Forces. That scheme has worked well. My elder son was part of that scheme and benefited from it. Therefore, I do not share the horrors expressed by Opposition Members about extending that scheme.
Many points have been raised in the debate. I hope that the Bill will be passed and that in Select Committee we can consider the many points that have still to be raised.

Mr. Ronald Brown: Before the Minister sits down, could he give me an answer to the point I raised on clause 13?

Mr. Goodhart: I have referred to the points on clause 13 which the hon. Member raised. If he looks at the record of my speech in Hansard, he will see that I gave a lengthy description of the powers in clause 13 and why we have them.

Mr. Soley: I would appreciate an answer at some time to the three important matters that I raised concerning the Rehabilitation of Offenders Act, the psychiatric provision and a place of safety for children.

Mr. Goodhart: About 30 points were raised in the brief debate and I am not able to answer them all in detail. I shall write to the hon. Gentleman. I hope, too, that those points will be discussed by the Select Committee.

Dr. Glyn: My hon. Friend was gracious enough to give way when he was dealing with clause 20 on a point concerning the status of women. It was said that some women in the Armed Forces were being trained in the use of small arms. If a member of the women's Services was involved in armed conflict, would she be treated as a combatant or non-combatant under international law? That is an important point.

Mr. Goodhart: During war any member of the Armed Forces involved with the enemy would be treated as a combatant. However, the training given to members of the women's Forces is solely for self-defence and not to prepare them to take part in offensive operations.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Select Committee.—[Mr. Brooke.]

Orders of the Day — British Railways Board (Increase of Compensation Limit)

The Secretary of State for Transport (Mr. Norman Fowler): I beg to move,
That the draft British Railways Board (Increase of Compensation Limit) Order 1981, which was laid before this House on 28 January, be approved.
The purpose of the order is to provide for the continuing payment of grant by the Government to the British Railways Board for the operation of its rail passenger system. At present the limit on total cumulative payments which may be made from the end of 1978 is £1,750 million, as provided for in section 14 of the Transport Act 1978. The order will increase that limit to £3,000 million.
It may help the House in its consideration of the order if I outline the background to the subsidy arrangements for British Rail. By far the most substantial grant—the public service obligation or PSO grant—is paid in accordance with EEC regulation 1191 of 1969, which provides that railways shall be operated on a commercial basis except where a public service obligation has been imposed. The Railways Act 1974 gave effect to the provisions of that regulation in Great Britain. Section 3 empowered the Secretary of State, as the competent authority, to impose a general obligation on the Railways Board. Accordingly, in December 1974 the then Minister of Transport, Mr. Mulley, imposed an obligation, which still stands, that the board shall provide a rail passenger service which is broadly comparable with the one existing at that time.
The subsidy for the board's passenger services has been paid in respect of that obligation ever since. In addition, a much smaller grant is paid to the Railways Board under EEC regulation 1192 of 1969. This grant is paid towards expenditure on level crossings.
When the House considered the 1974 Railways Bill, it agreed that the total subsidy payable to the board under these regulations, assessed on a cumulative basis, should be subject to an overall limit. That decision allows the House a periodic opportunity to consider the amount of public funds made available in grants to the board.
I believe the original limit of £1,500 million set in 1974 was intended to last five years. The House will not be surprised to learn that the inroads of inflation meant that, in spite of the board's success in keeping within annual grant ceilings, the limit was exhausted before that time. As a result a new limit of £1,750 million, applicable to grant paid from 1 January 1979, was set by the Transport Act 1978. It is that limit which this order seeks to increase.
I understand that grant covered by the existing limit totalled £1,089 million up to the end of 1980. There is still, therefore, some time before the existing limit is exhausted. Our expectation is that payments will approach the limit only towards the end of this year. We thought it right, however, to bring this order forward now so that the House's views may be known before my right hon. and learned Friend the Chancellor of the Exchequer presents his Estimates for the next financial year.
That is the background. But, of course, we also have the opportunity to debate briefly the position of British Rail. I welcome that. First and foremost, we should be clear about the position as regards British Rail and the


finance going to it. I saw a story in one of the Sunday papers which referred to Government neglect of the railways. That is emphatically not so.
The truth is that, at a time of public expenditure restraint, the railways have been generously treated. That is the fact of the matter. There are no apologies to be made. Despite the current economic recession, the Government have maintained, and in some cases increased, support to British Rail. I give the House five facts about Government support for the railways.
First, in the current year 1980–81, we increased the total of grants and loans within which the railways board has to manage—its external financing limit—by £40 million to £790 million. In other words, we have given to the board the flexibility it asked for. The board has welcomed this policy.
Secondly, the board's external financing limit for 1981–82 is, at £920 million, £30 million above what had been provided for in previous plans. Of course, we have set it a tough target, but it is also realistic and I know that the chairman recognises it as such. The board has accepted that EFL.
Thirdly, within these increased external financing limits, the provision for the public service obligation grant in 1981 is £678 million, that is £23 million above the previously planned provision. That additional provision was made to help the board maintain a 12-month interval between fare increases.
Fourthly, I wish to make it clear that we have not cut investment. We have maintained it. There still appear to be some who do not understand the present position. I saw on television the leader of the Liberal Party freely asserting that the Government had cut the investment ceiling. That simply is not the case. We freed track renewal from control of the investment ceiling. When allowance is made for that, the investment ceiling remains at the same level in real terms as when we came to office, that is, £325 million a year.
Within that ceiling the board has been able to carry out a wide-ranging programme of improvements and renewals. It has been able to effect considerable improvements in its inter-city services, including the introduction of high speed trains, of which 95 are now in service or authorised. It also has authority for substantial builds of modern freight locomotives and wagons—1,500 of the latter. A number of major investments have been carried out, or are being carried out, to improve London commuter services—for example, electrification of the Bedford-St. Pancras line, and re-signalling projects at Victoria and on the London to Brighton line. In addition, there is a rolling programme for 220 EMUs a year, many of them intended for Southern region inner suburban services.

Mr. Donald Anderson: Mr. Donald Anderson (Swansea, West) rose—

Mr. Fowler: To that I have added proposals for major re-signalling on the West of England route costing about £28 million. I announced my approval on 28 January. I have also welcomed in principle the board's proposals for new train ferry services. That will be dependent upon the progress towards recovery of the freight business.
The next large investment issue is that of electrification. We shall publish tomorrow the final report of the joint British Rail and Department of Transport review. The review was set up some time ago. We do not intend to take

instant decisions. The report presents several broad issues that the Government will need to consider. Electrification would require substantial extra investment, mainly for the benefit of the board's commercial rail businesses, intercity and freight. It will make cash flow demands well into the 1990s. I shall have to consider carefully with my colleagues the prospects of the board's commercial business and how the funds to finance electrification might be generated. That will be the next stage in our consideration.

Mr. Anderson: Will the right hon. Gentleman indicate what progress, if any, has been made between himself and his right hon. and learned Friend the Chancellor of the Exchequer on introducing a more flexible means of British Rail financing, especially lease and lease-back arrangements?

Mr. Fowler: That involves a number of issues. There is some flexibility behind what we are doing in the Transport Bill in bringing investment into the rail subsidiaries. That is one way of achieving flexibility. That is being debated at some length in Committee. We have also given the board the sort of flexibility that it wanted in the external finance limits at the end of each year—in other words, the increase in the carry-over for which the board, and especially Sir Peter Parker, have asked. We have gone a long way in trying to create flexibility.

Mr. Stephen Ross: The right hon. Gentleman referred to track repairs and expenditure on track maintenance. Is it not a fact that the advanced passenger train, which is soon to be introduced on the Euston-Glasgow route, will not be able to travel at the speed of which it is capable because certain areas of the track are not up to standard? Is he prepared to advance some money for that to be put right?

Mr. Fowler: I am prepared to consider that. The hon. Gentleman should be under no illusion about what is holding up the advanced passenger train. Responsibility does not lie with Government policy. The advanced passenger train is behind time and there are still matters that have to be put right. We want to see the prototypes in service, and we shall make our decisions when that has taken place. The train is not in service, but we hope that it will be as soon as possible. The delays have not been caused by Government policy.
The fifth policy achievement of the Government is that I have given a clear commitment that there will be no new round of Beeching cuts. I am interested in ensuring that we have the most cost-effective service that is possible. I am especially glad that my commitment has stimulated the board to develop new solutions to what has clearly been a problem for many years.
I hope that the board will now be able to mount a demonstration project using low-cost, light-weight vehicles and radio signalling on one of its rural lines. It: is not enough for us to say that the present situation should be maintained. I want to see forward development. A demonstration project of the sort to which I have referred will be a useful way forward for the rural services, which undoubtedly and unquestionably are important for many members of the public. We should try to move forward here, and I am glad that the board is now seeking to do that.
Other measures that we have taken have been designed to assist the board to move with the times, to rationalise


its business and to provide increased flexibility. The 1981–82 external finance limit includes an additional £53 million to cover the short-term costs of closing the collected and delivered parcels business, which has been losing nearly £1 million a week. I think that there would be agreement on both sides of the House that it would be sensible for the Government to make special provision for the closure and contraction of business of that sort. Track renewal has been free from the control of the investment ceiling. In common with other nationalised industries, the British Railways Board is now allowed some end-year flexibility in meeting its external financing limits.
In spite of those measures, we recognise the legitimate concerns that are felt by the public, both by those who use the railways and undoubtedly feel that standards are not keeping pace with fares, and those whose concern is the continuing demand for taxpayers' money. The Government share both those concerns.
If the present financial constraints are biting hard, we have to ask why. The board's income has increased in the last five years. A traveller has had to pay more, with real fare increases. Grant payments have also increased in real terms since 1975 by about 6 per cent., if both Government and local government payments are included. This year we expect British Railways to receive nearly £2 million a day in direct passenger grants.
here is a further area of concern—that of investment. The Board has made no secret of its view that more public money for investment is necessary. Its thinking has now been set out in its corporate plan for 1981–85, which I am now considering, and on which I shall make a statement when I have had an opportunity to consider it in detail. In the last few days I have had constructive discussions about various aspects of the plan with the Rail Council, which, as the right hon. Member for Barrow-in-Furness (Mr. Booth) knows, represents not only the board but the major unions in the railway industry.
I understand the board's concern about the level of investment, but the future of the railways is not simply a matter for the Government. It is a matter for the whole railway industry, including the unions. There is no doubt that there must be an increase in productivity. In its corporate plan, which it published in November, the board drew attention to the fact that it could run the railways with 38,000 fewer posts. That does not mean a smaller railway. It may be slimmer and leaner, but it will not be smaller. It is planned to increase output in terms of passenger and freight tonne miles. By increasing productivity and efficiency British Railways can generate the funds that could enable them to afford the investment that will secure the long-term future of the railways. The Government believe sincerely in that long-term future.

Mr. Stanley Newens: The Minister talks about increasing productivity on the railways, but does he recognise that steps such as closing stations in the evenings and at weekends are part and parcel of the process? Does he approve of the recent proposals to close 150 stations in the South-East of England? Surely that is depriving people of a service that could easily be provided by those who are otherwise likely to be on the dole.

Mr. Fowler: I am sure that the hon. Gentleman will make his contribution on that point and the question of services. I shall be glad to respond when he does so. The

general point that I make to him is basically that we say to British Rail that this is the cash limit within which it has to live, and clearly it must be right for us to give to British Rail the discretion and the decisions on how it comes within that. I should not have thought that any Government—whether I or the right hon. Member for Barrow-in-Furness was Secretary of State—would contemplate a system which was totally unchanging, year in and year out. Therefore, it is fair to say that this must be a decision that the chairman and the board of British Rail must make. I am quite prepared to deal with that argument in more detail if the hon. Gentleman wishes me to do so.
By the actions that the Government have taken to help British Rail through its current and, I hope, short-term difficulties, they have shown that they believe in the future of the railway industry, but that future must be earned. Current trends must be reversed. The board's costs have been increasing in real terms, and there has been no satisfactory explanation of why that has been so.
Underlying all the efforts of the British Railways Board must be the issue of increased productivity. The chairman of British Rail, Sir Peter Parker, has said—and I agree with him—that productivity is the rock upon which we must build the future of the railways. The board has recognised that in its corporate plan, which provides for substantial productivity improvements in the next few years. The experience of the past 10 years has not been as encouraging as that of the previous decade. During the 1960s, output per man rose by about 97 per cent. In the 1970s the net productivity gain, according to the Monopolies and Mergers Commission, was about 5 per cent. The commission noted in its report on the London commuter services the relatively low rate of productivity improvements over the last 10 years and said that had been a significant factor inhibiting improvements in pay levels.
I believe that improvements are necessary and possible on both sides of the industry. I know that British Rail's management is tackling the criticisms made by the Monopolies and Mergers Commission. For example, one area was that of maintenance costs, where the commission found that, with the present system of controls, British Rail had not immediately been able to explain with any certainty the reason for varying rates of increase in rolling stock maintenance costs, nor give any reliable figures for the effect on maintenance costs of ageing rolling stock. The Monopolies and Mergers Commission also commented on a lack of direct material cost control.
I am concerned also about overall cost control. The commission commented that the board's planning system had probably not been effective in building cost reduction targets into its plans. The commission's general view was that the board had made major efforts to reduce costs only at times of financial crisis. It is fair to say that the commission also found evidence that British Rail was taking steps to correct those failings. We must all hope that those succeed. I think that action lies with the board. The setting of cost targets and progress towards them is something that I shall pursue vigorously with the board.
The House will expect to hear how I see the future of the obligation and of the different parts of the passenger business. There is no question but that the obligation will have to be revised. We cannot for ever expect the general service levels that were appropriate in 1974. The board must have better objectives. I do not propose to amend the extent of the obligation. As long ago as 1979 I ruled out


any substantial reduction of the passenger network. I am glad that the board is actively investigating more cost-effective ways of keeping the rural services going. I trust that it will give proper priority to maintaining the track.
The London commuter services represent one of the most important areas. We certainly need clearer accountability and clearer objectives. I shall make a fuller statement later on action to follow up the report of Monopolies and Mergers Commission. Meanwhile, I have asked the board to let me have a clear statement about its plans for commuter services and about the options for improving the quality of service to the customer.
I am bound to tell the House of my concern over the business performance of the inter-city services. Last March I announced an interim financial target—which had been agreed with the board—as a step towards a full commercial objective. The board's corporate plan says that this interim target will not be reached, even on a very rosy traffic forecast and even with all the expected productivity improvements. It is clear that this situation, at the heart of the railway, presents serious problems of investment and business planning that will have to be tackled.
Finally, the Government recognise the importance of the railways. We accept the need to support passenger services. We have given British Rail a fair deal this year. Indeed, we have given as much support as the Labour Government thought adequate. But we must continue to look for cost savings, increased productivity and better performance in the commercial business. The future of British Rail will be secured in this way, through a constructive partnership between the board and its staff. The order provides for a continuation of this policy and of the realistic arrangements for Goverment revenue support. I urge the House to endorse that view.

Mr. Albert Booth: Under this order the limit of the public service obligation will be subject to increase. The obligation was introduced in 1974 and was intended to enable British Railways to maintain their network. It was the way that the House had of saying "No more Beechings. We do not want railway services cut. We have had too many cuts. We want to maintain our railway services."
Like those who are concerned about keeping the network, the Secretary of State should realise that it is increasingly apparent that the network of 1974 cannot be maintained by the present level of public service obligation. The strain of attempting to maintain it has created serious problems for British Rail. I am not saying that there has been a dramatic change in the Government's concept of the public service obligation. As we wish to have a constructive debate, I hope that hon. Members will accept that the public service obligation has, in real purchasing power terms, been roughly maintained at the level set when it was introduced. It may have fallen a bit, but it is about the same.
It is my contention—supported, I think, by most people who have studied the railway service—that this PSO will not sustain the network. There is evidence of that on every hand. If I give a few examples from Cumbria, not because I maintain that Cumbria has a worse service than any other part of the country—of course, it is a more important part

of the country because my constituency is there—but because they show that there are a number of lines in difficulty.
I shall start with the main line from Euston to Carlisle. On that line, there are arrears of track work in Cumbria which require the relaying of 2¼ miles of track, reballasting for several miles and some earthworks. Because of the condition of the track, from June next the timetable will have a 10 minutes addition placed upon it. In spite of that, I am told by British Rail that, even with that additional time, the punctuality targets will be revised downwards.
The signalling system on the coast line—serving the constituencies of Barrow, Workington, Whitehaven and Carlisle, and the constituency of the Home Secretary—which is contended to be still safe—dates back to 1879. They must have built good signalling systems in 1879, because they still work today. Indeed, 60 per cent. of the boxes date back to the early 1900s. Obviously they are labour-intensive. Perhaps that casts some reflection on what the Secretary of State said about productivity. On that line, there are arrears of track work which now require the relaying of 13 miles of the track, and reballasting of four miles, to say nothing of the work that needs to be done on the sea defences.
Let us consider the rolling stock on the lines that serve my constituency. The diesel multiple units, which were built to last for 10 to 15 years, are now over 23 years old. I cannot believe that an estimate cannot be given of how much it would cost to keep these diesel multiple units on the track. I have been to the workshops where the DMUs are refurbished. The cost must be known because so much of that work is done.
It is not unusual in the Preston division, which operates from the south into my constituency, to start the morning with seven out of 40 units short. It is a wonder that there is so little severe disruption in the service. I imagine that the only reason is the very skilled manipulation by the BR controllers of the very outdated DMUs.
About 3,000 miles of the 12,000 miles of the country's network are at risk of being put under speed restriction and ultimate closure because there is not enough investment. Signalling systems such as the one I mentioned on the coast line are not hard to find. They will soon be incapable of repair and will need replacing. Viaducts which carry vital rail links are in need of replacement, and some are in danger of collapsing. Carriages are threadbare, and in many areas rolling stock is at the end of its useful working life.
All these facets of the system are calling out for investment. They reached their peak of service years ago. What will the future be if we maintain the same PSO regime, using the powers of this order to keep it going for another few years? In other words, why has the situation developed?
I contend, first, that it has developed, in part, because the cost of replacing railway equipment has increased since the PSO was set while the PSO has not increased. It is not for want of increases in fares. There have been substantial increases in fares. We have probably the highest fare levels in Europe. But the proportion of the cost borne by fares in maintaining social lines, even if they maintain their fare income, still leaves that remaining proportion more expensive to finance in terms of replacing the equipment on those lines.
Of even greater significance has been the postponing of investment by British Rail to keep within its PSO and external financing limit. The Secretary of State was unfair when he quoted an occasion on which British Rail went outside the limit, because its record of staying within its PSO and financing limit is extremely good. Generally speaking, it keeps within the PSO limits by a margin which shows that it is a careful cost controller. However, it has kept within the PSO margins only by delaying work. It has said "If we are to keep within the limits this year, we cannot afford to carry out this or that investment project or this or that piece of track maintenance. We shall not be able to replace this signalling system or these DMUs."
Increasingly, British Rail is facing higher operating costs because it is using outdated stock. It is obviously more expensive to operate an old life-expired DMU than its modern equivalent. Therefore, that adds to the cost.
It is not inappropriate to draw an analogy between British Rail and a man who is deciding whether to replace his car. In making a decision whether to replace one's car, one estimates how much it will cost to keep it on the road for another year or two years. One considers what major repairs will need to be carried out and whether the tyres will have to be replaced. One may come to the conclusion, having made such an assessment, that it will be cheaper to buy a new car than to retain the old one, even if one has to borrow money at present high interest rates to buy a new car. British Rail is very much in that position. It is clear that British Rail is determined that there will be no reduction in safety standards as a result of these arrears of track maintenance and because it is operating with outdated life-expired stock.

Mr. Anderson: I suggest that the analogy drawn by my right hon. Friend has an even stronger effect on rail transport, because it provides services for others. Investment in new stock is likely to increase revenue, because it will attract passengers.

Mr. Booth: I take my hon. Friend's point. The analogy could have been better chosen. I should have referred to the replacement of a bus rather than a car. The bus operator would know that he would be likely to attract more passengers if he provided a new bus. Therefore, he would make his calculations in that light.
The point is that there is a cost over and above this financial cost to the railways. It is a cost to passengers in terms of services which are being cut. My hon. Friend the Member for Harlow (Mr. Newens) referred to a massive cutback in services to South-East commuters. But throughout the country one is seeing cuts in the frequency of services.
There is a further cost to be borne by passengers in speed reductions and the extension of journey times unless there is a change. Some reductions have already taken place. There is a further cost to be borne by passengers in railway operation reliability.
I am sure that British Rail will not deliberately reduce safety margins. But if British Rail has to put an old piece of rolling stock on a not so well maintained track with an outdated signalling system, its chances of being able to maintain scheduled services must be reduced. Indeed, there must be a greater possibility of breakdowns.
The longer we delay the decision—I say "we", because I accept that the problems have not arisen since the

election of the Government—the greater will be the cost to the public of dealing with it. It will not only be greater cost up to the point when the decision is taken, but the greater cost of running outdated stock and the higher cost of new investment. I assume that a greater public service obligation will be required in the future for feeder or social lines, if only to pay the higher interest on the new heavier investment. On the main lines, where one can reasonably hope to gain a full return on the investment, that factor does not bear. It will affect the public service obligation which is largely related to feeder lines where it is understandably held that there must be a social contribution to maintain the services.
If one judges British Railways—by that I mean all those who work in the railway unions as well as members of the board—by their ability to meet their costs against any other railway system in Europe, one finds that they have performed remarkably well. They are the best in Europe measured by the yardstick of their ability to meet the costs from fares and freight charges. They are nearer to being self-financed than any other system. No railway system is self-financed, but the British Railways system has the highest self-financing ratio in Europe. That is why it is unfair of the Secretary of State to imply that there are some great productivity improvements to be made by cutting out stock.
Part of the productivity improvement that can be brought about depends on the ability to invest in more modern equipment. On the Cumbrian coast line a modern signalling system would reduce manning requirements by decreasing outdated signal boxes. Part of the productivity gain will come only with the decision to invest. I maintain that British Rail has achieved a higher self-financing ratio than any other railway system in Europe. In addition, it gained passengers up until 1979. Any loss of passengers reflects two changes that could not have been avoided by any action by British Railways. It would be tragic if we were to allow our railway system to rattle into decline because we did not face up to the question of the inappropriateness of the concept of public service obligation which maintains it at that level.
I turn to an issue which directly relates to public service obligation. It stems from the views of the EEC Commission and the role of the EEC in railways. In a debate about public service obligation, that is appropriate. The EEC Council regulation 1191/69 obliged us to introduce the 1974 Act provision for public service obligation. We have to bear in mind that Britain is not alone in wrestling with financial prospects for railways. The EEC recently has published a document entitled "Community Railway Policy: Review and Outlook for the 1980s". The document is a communication from the Commission to the Council. The document refers to the potential increased demand for railway transport both for freight and passengers, and indicates that between 1973 and 1977 State financial intervention in EEC railways increased by more than 60 per cent. We should see our maintenance of a level PSO against an increase in the EEC of 60 per cent. in financial obligation.
The document states:
The railways therefore may look forward to a growing market, but their potential to realise a greater market share is a function of internal management decisions and Government-railway decisions regarding investment and restructuring. The basic objective must be efficiency, both in the production of high quality social and commercial services for users, and in marketing these services.


Those are sentiments with which I suspect the Secretary of State agrees. I do not suppose that he will object to them, and neither would most hon. Members.
When I first read the document, I assumed that, having expressed such views, noted the massive intervention and realised the potential for expansion of the railways, the Commission would go on to state that EEC policy should reflect those factors. Strangely, almost perversely the second chapter of the document, headed "Community Railway Policy", comes to almost exactly the opposite conclusion. It states:
Community railway policy has two basic objectives: elimination of distortions in the inland transport market—improvement of the railway service performance and financial situation.
The document sets out the basic principles on which Community legislation has been built in order to attain those objectives. It says:
these objectives are"—
and this is the first—
reduction of public service obligations".
It outlines other reductions of aids, but I have no need to go through them. I want an assurance from the Secretary of State that he will resist any move by the EEC to suggest that we should have a reduction in the PSO, following a period when the general rise in intervention in Europe has been about 60 per cent., while our PSO has been maintained at a virtually flat level.
The public service obligation must be sustained. It is our society's payment for the service that it needs now and which, when we exhaust the oil stock of the planet, will be increasingly needed. I hope that we can look objectively and realistically at a serious problem for the United Kingdom and be prepared to recognise that we cannot use an instrument that appeared to be right in 1974 as though no changes had taken place and as though it had been completely successful. The reality is that it is not up to the job that has to be done in the 1980s, and accordingly we must change it.

Mr. Bob Cryer: The rubric on the Order Paper stating that the order has not been considered by the Statutory Instruments Committee is not correct, because it was so considered this afternoon. The Committee asked for a memorandum from the Department of Transport on the instrument and felt that the explanatory note was less than adequate in explaining the purpose of the instrument. For example, there is no indication of the cumulative nature of the total expenditure that the instrument authorises, and the Committee has commented to that effect. We have not held up the instrument and we were pleased that the Department co-operated in providing an explanation.
On the general purpose of the instrument, the subsidy, of course, is entirely separate. The Committee does not deal with the merits of an instrument, as I shall do. It deals purely with the powers of the Minister and the scope of the instrument under the primary legislation, to see whether the instrument is within the scope of that legislation, and reports any inconsistencies to the House.
I turn briefly to the merits of the order, which are of great importance to me and to other hon. Members. The subsidy paid under the regulations is clearly extremely important, and the raising of the limit in anticipation of expenditure is certainly very welcome.
There are, nevertheless, areas of concern. The Minister said that the track renewal programme was freed from the investment ceiling. Can he tell the House, first, whether this is the result of the railway inspectorate's last annual report? Paragraph 30 of that report contains a clear implication that the financial limits on British Rail are resulting in a lowering of track maintenance standards, to the point where some kind of danger is lurking, or would be lurking, but for improvements. I hope that the Minister can give an answer to that very important—and very rare—comment by the railway inspectorate. There is no question but that British Rail's safety standards are extremely high.

Mr. Fowler: Perhaps I can help the hon. Gentleman on his first question. The fact is that action there pre-dated the report to which he has referred. It was action that was taken a year previously.

Mr. Cryer: That makes it even more serious, because the implication in the report is that there is a need for yet greater investment in order to raise the standard of track maintenance to account for the services—the increased speeds being maintained by the HS 125s, and so on. The hon. Member for Isle of Wight (Mr. Ross) raised the question of track speeds of the APTs under existing maintenance standards. I therefore hope that the Minister will bear the inspectorate's report very much in mind because it is an important element.
With regard to productivity, British Rail, by and large, has an enviable safety record. While an increase in productivity is clearly desirable, it cannot be undertaken by lowering safety standards. There are situations in which productivity cannot be increased except at the expense of safety standards. There must be people, for example, to maintain scrutiny of passengers on curved platforms. One cannot dispense with guards unless there are straight platforms so that drivers can look out to ensure that all passengers have boarded.
The railway unions have co-operated with alterations in practice. They have, for instance, abandoned the practice of the guard always riding at the back of the train. After long internal argument they have allowed the guard to be carried on the locomotive. But that was only possible as a result of investment in continuously braked trains. So long as there is lack of investment, allowing loose-coupled freight trains to travel at 40 miles per hour, there is a risk of a breakaway and there must be somebody at the back to put on the hand brake and pin down the wagon brakes.
All this may seem terribly old-fashioned. Indeed, it is. But until there is investment in new wagons with continuous acting brakes, so that if there is a breakaway the brakes go on automatically as they do on passenger trains, one cannot risk a lowering of safety standards by moving guards from the rear of the train. The railway unions are keenly aware of this matter. They want to help, but they are not prepared to lower standards, and quite properly so.

Mr. Robin F. Cook: My hon. Friend has made a number of useful and interesting points concerning productivity in British Rail. He will wish to acknowledge that recent figures show conclusively that British Rail's productivity in terms of men per locomotive or men per track mile is substantially higher than that of most other European networks.

Mr. Cryer: I was about to make that point. Productivity compares extremely well on an international European basis in spite of a lack of investment in British Rail to achieve the modernisation that I have outlined.
The cries from the Conservative Benches that it is the fault of overmanning and the unions simply are not true. The Minister has not made that claim tonight, and I do not want to be unfair to him. However, that is a claim which is often made by Conservative Members in an entirely unknowledgeable and superficial way.
The railways are bearing the brunt of the recession. The freight side of the business carries basic commodities for the iron, steel and coal trades. As a result of the difficulties in those industries, exemplified by the announcement of the proposed closure of 50 pits, where will the bulk of the coal be carried for those 50 pits if those closures ever come about? I do not think that they will, because of the attitude of the NUM. However, if they do take place probably around 90 per cent.—certainly the top percentage—will be lost to rail. Therefore, the railways will be hit yet again. I hope that the Minister takes that point seriously into account when providing support for the railways. They are taking the brunt of the recession because they carry these basic services.
The right hon. Gentleman also mentioned parcel closure. That is a loss of traffic for British Railways. However, the decline in parcels is another reflection of the recession. There is a large parcels depot in Bradford because there are a number of mail order firms, such as Grattan Warehouses. I understand that the decline in parcel traffic will mean about 200 redundancies.
My hon. Friend the Member for Harlow (Mr. Newens) asked what the achievement would be in cutting railway jobs, forcing people to go on the dole, with support being paid by the Department of Employment. The closure of the parcels service will lead to redundancies. Again, that is a consequence of the recession.
The Minister said that he wants to see better objectives. I hope that that does not mean any reduction in the railway passenger network in the future. We have about 11,000 miles of railways and they are extremely precious. I hope that the right hon. Gentleman will define more precisely what he means by "better objectives".
He talked about a reduction in railway manpower of 38,000. We should like more information about what British Railways have in mind and what they have explained to him. Railwaymen tell me that on a service such as the Morecambe-Keighley-Leeds service, which uses 20-year-old diesel multiple units, the manpower available for maintenance is simply inadequate to keep those old units in operation, even though they have been refurbished, up to the level of service which is necessary. They explained to me that a locomotive-hauled train often arrives late because of the lack of maintenance facilities for the diesel multiple units, which in any case is more expensive.
Have British Railways advanced any proposals—I know that a plan will be announced tomorrow and I hope that the Minister is sympathetic to it—for replacements for the DMUs? I doubt whether they will last another five to 10 years without a significant increase in maintenance facilities.
If we are to attract passengers on to the railways, we must have an efficient, speedy, punctual service. That is what British Railways want. Such services are provided more often than general comment supposes. However, as

the multiple units must undertake this task, and as the years pass, it is increasingly difficult for British Railways to achieve such a service. Keighley station is attracting many passengers. It wants to improve the passenger figures to provide a viable railway service.
Some of the investment figures mentioned in the Armitage report on heavy road vehicles refer to massive sums of money—up to £1·2 billion to strengthen bridges to comply with EEC heavy vehicle standards. When we talk about investment for British Railways, we are talking about relatively modest sums of money.
The Minister said that the inter-city services did not generate the expected amount of passenger traffic. That is a reflection of the recession. British industry is grinding virtually to a halt, and that must be reflected in fewer passenger journeys. Engineers are not travelling to carry out outfitting, and salesmen are not travelling to sell their goods or services, simply because the demand is not there.
The service from Leeds to London on the HS125 is excellent. From observation—although I know that that is not totally reliable—it runs to time, has good investment and runs smoothly. Of course, I do not know the exact percentage of efficiency. The Minister must bear in mind that when his right hon. Friend the Secretary of State for the Environment announces that the Government will spend £25 or £30 million on a Leeds-Bradford airport runway extension, that money must have some effect on the excellent British Railways service. If that investment improves the availability of aeroplanes flying to and from Leeds-Bradford, that will divert passengers from British Rail. It does not make sense to have an excellent railway service and, at the same time, to divert resources to a rival air service that will detract from our publicly owned transport system.
I hope that the debate will bring home to the Minister the need for an increase, in real terms, in investment in British Railways. It is an important network which the British people own and appreciate.

Mr. Ted Leadbitter: I shall speak only for four or five minutes because I spoke about transport not long ago.
The debate gives us the opportunity to ask, once again, a number of questions and to pinpoint the concern of British Rail and the trade unions. It is clear that Sir Peter Parker, the chairman of British Rail, is deeply concerned. That man, whose judgment is not to be questioned and who has available to him the expert knowledge of his officers, has described the position as being corrupt not at the skin of the apple, but at the core. He is extremely worried because British Rail will have reached the point of no return unless we make a commitment to invest considerably larger sums than those we are discussing.
It has already been pointed out that we cannot measure the significance of the order because the explanatory note refers simply to an increase from £1,750 million to £3,000 million. We do not know the significance of that figure within the total ceiling of the powers of the Secretary of State in relation to the public service obligation.
A recent visitor to the House of Commons was the divisional manager of the North-Eastern division of British Railways. He was so concerned with the present position that he brought with him his technical officers. I was surprised to find that, in his judgment, some part of his region had more than a year's backlog of track


maintenance. He referred to another part of his area where trains were subjected to more than 50 varying speed limits to take account of the track conditions.
Recently, at Question Time, I asked about safety in relation to investment and cash limits. I was glad to hear that British Rail standards are such that accidents are minimal. British Rail has a proud record. However, British Rail officials believe that they are reaching the point of overstretch. Track maintenance and the condition of some rolling stock and in particular the diesel multiple units on feeder lines are causing anxiety. The Secretary of State would be wise to consider whether there is an imbalance between the proposals for roads and the proposals for British Rail.
I wonder to what extent the unions can react. The general secretaries of ASLEF and the NUR have publicly announced their anxiety about the physical conditions of the track and support systems. The House must respond to the judgment of Sir Peter Parker and the unions. They are worried about British Rail's efficiency and the safety of workers and passengers. A large reduction in the work force is not acceptable unless the highest standards of investment and safety are observed.
An ominous note was sounded when the Secretary of State referred to better objectives within the programme. The objectives must be made clear. If they are not, suspicions will be aroused about the consequential implications.
A divisional manager in my area is visiting all the authorities and all the bodies interested in the railways in order to whip up a campaign and to impress upon hon. Members the need to underline the erosion of efficiencies as a result of the Government not providing the wherewithal to meet the target demands.
The order says little. We should reflect, nevertheless, on the larger questions and the implications of cash limits and investment. I apologise to the Secretary of State for not being able to be present to hear what he said. I am sure that he will understand if I have referred to matters with which he has already dealt. I am interested in transport and I am sure that he will accept my apology.

Mr. Stephen Ross: I shall not delay the House for more than a few minutes. I am sure that the Minister is genuine in his support for the railways. I welcome his total rejection of any Beeching-type operation. The troubles in the railways have certainly not arisen only in the last 18 months, and the Minister should not take responsibilty for them. They have built up over many years.
I hope that the Minister's undertaking on the Beeching cuts will apply to the Isle of Wight, where we have the most decrepit underground system overground in the country. When British Rail, at great expense, decided to electrify our lines with the third rail systems, it could not find wagons which would go through our tunnels, so it bought up Piccadilly Line stock of 1927 vintage. We are keeping the lines repaired, but it is quite a run between Ryde and Shanklin, as the train shakes the daylights out of the passengers. The lines will have to be replaced. Therefore, I am making a plea that the promise that the Minister has given tonight will extend to my constituency.
It is sad that the British Rail Board has been advised to raise its fares to the present extent. Tonight I was at a

meeting at which someone who had come up especially from Cornwall told me that the return fare was about £100. It is about £20 for a first-class return fare to Southampton. I know that those are weekly returns and that day returns are much cheaper, but they are huge sums. My son is studying at the agricultural college in Aberdeen. Even with his student rail card, it is cheaper for him to go back on a coach to Aberdeen than by train—although he would have to suffer a long journey. That is not right when the service is so good north of London.
I, too, make a plea for track maintenance. It is a worrying matter. I cite the example of the United States, where they wish that they had maintained their tracks. Now they are paying the penalty for not doing so. That is not an example that we should follow.
I make a plea for the London commuter service. The Minister said that he would study it as a special report and that he would make a statement to the House. Those who travel in the Southern Region have had the worst end of the bargain on investment in recent years. The services north of London—out of Euston, Paddington and Kings Cross—are superb. They are not better anywhere in the world, including Japan.
However, south of London the services are not superb, particularly the South Coast services to Southampton, Portsmouth and Brighton. We have a marvellous one hour, 10 minute service between London and Southampton, but we are rattled to pieces by the train. That cannot continue much longer. I fear that the service will be slowed down, because it will be impossible to maintain it with the present stock. The Portsmouth service has not been improved for 30 years and the trains are dirty. Travellers on those trains deserve better.
Morale on those services is at a low ebb. I was lucky to travel on one of the HSTs when they were first introduced. The morale of the passenger manager and the staff on the train was sky high. They were proud to be on a new train, to have new stock and to be doing a good service. Many people were flocking on to the trains. The staff felt that at long last there was a new era when it was worthy to be on a railway that worked.
However, the staff on trains to Portsmouth and other places have lost heart. I am not criticising them in particular, but this is a typical example. Last Friday week I arrived at Portsmouth Harbour station, which is not the best place in the world to arrive, and it was mobbed. There was no boat to the Isle of Wight. I asked if the car ferry was running and I was told that it was not. I then asked if the hovercraft was and the reply was "Don't know, mate". In fact, the hovercraft was running and it is a pity that the opportunity was missed to provide a service to the passengers with a mini-bus to run them to the hovercraft, either paid for by British Rail or subsidised by the passengers. That service does not exist because the staff is demoralised. That is what happens when facilities run down.
I ask the Minister to look with sympathy at the report that will be coming to him about commuter services and to see what finance he can find. He will have a battle. The Cabinet does not like spending money these days. The Minister will continue to fight a good battle. He believes that our railways are worthy of investment. I ask him to direct particular attention to the services south of London.

Mr. Donald Anderson: From my experience of the railway in South Wales I confirm the point made by the hon. Member for Isle of Wight (Mr. Ross) about the increase in morale when investment takes place.
I should like to take up two points made by my hon. Friend the Member for Keighley (Mr. Cryer) in his most valuable speech. They concern labour productivity and the effects of recession. The Minister overstressed the possibility of improvements in productivity. He compared this decade with the previous decade and said that our productivity was greater in the previous decade. That goes without saying. The previous decade was the era of Beeching. Track mileage was reduced in a draconian way in the 1960s that productivity gains inevitably resulted.
The Minister also failed to place his point on labour productivity in the European context. The booklet that I have here "European Railways Performance Comparisons" covers the major EEC and Scandinavian railways. In the period 1971 to 1976, comparing changes in traffic, train kilometres and staff, British Rail labour productivity per man was above average, bettered only by Sweden and the Netherlands.
In the Western region roughly three-quarters of the receipts from freight come from the coal and steel industries. We know what has happened with the slim-line operations on the major steelworks in Port Talbot and Llanwern. We are aware of the threat to so many pits from today's announcement. The railways can hardly be penalised as a result of Government decisions in other areas. The recession generally is affecting the use of the rail network by passengers.
The Minister stated that, although the order appears to be within a fairly narrow compass—the increase in the PSO to £3,000 million—it has a wider application. The finances of our rail network are interdependent. Within the context of the order we are bound to consider wages, investment and fares. The debate gives us an opportunity to examine the totality of public funding of the rail network.
The order arises from an EEC regulation, and it is instructive to compare the public financial support for British Rail with public financial support for railway undertakings inside and outside the Community. I have referred to the performance comparisons published in March last year. The booklet reaches the significant conclusion that the main reason for the different level of usage of the passenger railway is the difference in Government policies over the support level. More public money is spent on the Paris Metro than on the whole British Rail network. That is remarkable. With SNCF—the French national railway company—support from public funds is double that of British Rail.,British Rail is 71 per cent. self-financing. That is more than any of our neighbouring rail networks.
The message is clear. If it is a national objective of the Government, whether for energy conservation reasons or for environmental reasons, to encourage the use of rail passenger services, the way to do so is to increase public investment in the railways. The order deals specifically with the public service obligation grant that relates directly to investment in track and signalling. My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) has already referred to the cumulative effect of the neglect of

investment over the years in track and signalling. British Rail's recently published corporate plan refers to massive arrears in signalling and predicts the closure of 3,000 miles of track by 1990 on present investment levels.
No one on the Labour Benches has claimed that the deterioration in investment began in May 1979. It has been accumulating over a large number of years as Governments have taken short-term investment decisions. It is fair to say, as my hon. Friend the Member for Hartlepool (Mr. Leadbitter) remarked, that there is bound to be unreliability caused by engineering breakdowns as a result of lack of investment. As the reliability of the service becomes more unpredictable, the railway service itself becomes more unpopular and passenger receipts are reduced.
My right hon. Friend the Member for Barrow-in-Furness mentioned some of the outdated signalling stock in his area. According to figures that I have, over 7,000 miles of track are covered by signal boxes that are over 50 years old. It is generally recognised that the diesel multiple units, built largely at the end of the 1950s and expected to have a short life, are likely to be with us until at least the late 1980s and the early 1990s when, presumably, they will fall apart. They have far outlasted their expected life when they were originally built, during the phase of investment that occurred in the late 1950s.
I shall not dwell on the safety factor which has already been dealt with. If there is less investment in track renewal it is bound to have an effect on the safety record. At the last transport Question Time the Minister mentioned that there have been no passenger deaths in three of the past five years including last year. He failed to note the alarm contained in the McNaughton report in September 1980—the report of the chief inspecting officer of railways—which talked of the risk of the situation deteriorating and part of the reason for the increase in accidents arising from
the direct or indirect effects of the continuing financial problems facing railway management".
How do threats of closures on this scale arising because of constraints and because of the increasing obsolescence of stock and the increasing need to invest to patch up that stock, square with the continuing commitments made by the Minister about there being no reduction in the overall network? He made those commitments initially in November 1979 and confirmed in a letter to The Guardian, following a report in that newspaper, that there would be
no substantial cuts in the passengr rail network".
Many of us have asked "How substantial is substantial?" The Minister talks about there not being another Beeching. No one seriously expects the cuts to be on the scale of the Beeching cuts in the early 1960s, but to what extent will the Minister allow a reduction in the present passenger network of roughly 11,000 miles? Unless there is investment on a far larger scale there will, as the chairman of the board has said, be 3,000 fewer track miles in the network by the end of the decade.
British Rail has said that if the cash crisis continues there will be widespread line closures. These are inevitable, and large areas will be threatened by having no rail communications. No doubt the Minister saw the map of vulnerable lines that was published in The Sunday Times on 30 November 1980. I need hardly say to the right hon. Gentleman that some of the country lines, especially, are in politically sensitive areas. The closure of these lines will have an effect on outlying areas such as Wales.
If there is a reduction on the scale envisaged there is bound to be an effect on the Cambrian coast line and the Central Wales line. That will mean that there will be no lines in Wales between the North Wales coastal line and the South Wales coastal line, except, rather curiously, British Rail's last steam service in Wales, the Aberwystwyth to Devil's Bridge tourist route.
The chairman of British Rail said in November in a speech at Cardiff—which the right hon. Gentleman will no doubt remember because the chairman called him "courageous" among other things—that he could not direct cash from the core to the edges and that there was not enough money available to him for what he called
essential repairs let alone the modernisation of the rural railway.
The Minister will know about the problem of the Barmouth viaduct because of the eating away of the timber piles by the common shipworm. The £2½ million that is needed for the repair of the viaduct compares with the £265 million for 20 miles of the North Wales motorway. The fear in Wales is that British Rail is unable to meet the repair costs, which are estimated in excess of £2½ million, and that if the Government will not help specifically to overcome the special problems of the viaduct, the line will close, followed by the closure of the Machynlleth to Aberwystwyth line and eventually the Machynlleth to Shrewsbury line also.
Following the budget settlement of 30 May last year, the Minister will know that the first tranche of payments to the United Kingdom in December 1980 from the EEC meant that 30 per cent. of public investment in our rail network in Wales was covered by EEC grants. It is worth asking whether the Minister will consider increasing that proportion of assistance from the EEC. What consideration, if any, has been given to that?
I know that the railway unions are especially concerned about whether Wales is receiving a fair share of the PSO grant. The Minister will know that since the passage of the Railways Act 1974 it has been impossible to know what grant is attributable to any particular line. In the past, because of the receipts from steel and coal, we were able to live with a situation which cannot be maintained now because of the deep recession in those industries. The rail unions in South Wales feel that there is a real possibility—although there are no data to justify it or otherwise—that we are not receiving our fair share of the PSO grant.
I shall not discuss the cuts in London and the South-East because I know that my hon. Friend the Member for Harlow (Mr. Newens) will take up that point, which

effectively concerns his constituency. The British Railways Board admitted that the leaked documents about 150 station closures were authentic, but it said that in some cases the closures constituted timetable improvements. That must have come from the same joker who, when fares are increased, says that the fare structures have been reviewed. They are always reviewed upwards.
The Minister will know that for too long the country has been getting its railways on the cheap. Certainly for my father's and grandfather's generation work on the railways was the aristocracy of labour and very much at the top of the league table of wages. By contrast, the Minister will be aware of the Low Pay Unit report showing the extent to which railwaymen have to rely on family income supplement to bring up their wage levels. It also shows how low our railwaymen's wages are in comparison with international levels.
The Minister has now been presented with the corporate plan for 1981–85. British Railways are proposing a programme of investment which they say will mitigate in the 1980s and 1990s the past under-investment and meet the overall aim of the board to become viable on a long-term basis, increasing the investment from about £330 million to £450 million in the mid-1980s. That incorporates an extension of the electrification network. At present we are seventeenth in Europe in the percentage of electrified network. In the current year, only £11 million was spent on electrification. The Minister will have seen that there is a growing consensus in this country on the under-investment on railways in the past. We concede that he has kept the level of investment stable at a time of reduction in total Government expenditure. There is virtually unanimous press that consensus has been built up, so the Minister would be moving with public opinion if he now reacted positively to the corporate plan.
The Minister will also make the distinction between wasteful subsidies to the public sector and so-called creative investment. Investment in electrification will have a considerable return and the reaction of the Government to the electrification proposals will be a litmus test of their commitment to railways. It will be perceived by people in the railway industry as such, as the Minister was no doubt made aware when he attended the meeting of the Rail Council on 29 January. If there is a positive response to the electrification proposals, I assure the Minister that it will raise the morale in the industry and have a considerable effect on the climate of industrial relations in the industry. It will also make people realise that they are working in an industry of the future.

Mr. Stanley Newens: My purpose in intervening is to raise the question of cuts in the rail services that are used by people who travel between the large number of stations in South-East England and central London. I am astonished that of all the Conservative Back Benchers who represent constituencies around London, not one has sought to intervene in the debate. This is a contentious issue because commuters in the London area feel that they are being severely penalised at present.
We have heard from the Secretary of State that investment has not been cut and that various projects have gone ahead. Despite this, we in the South-East are faced with an extensive range of economies which will represent a substantial reduction in services available to rail users. Many of those affected will be rail commuters. However, many others who do not use the railways daily will be affected—those who wish to visit their relatives, to go on shopping trips or to go to the theatre or some other form of entertainment. Many of them will be hit hardest by the sort of cuts which are proposed.
I am, naturally, particularly concerned about my constituents in Harlow and the surrounding villages. They have banded themselves together in a commuters' association to voice their grievances over a considerable period. They have done this with dignity, raising many issues concerning the Liverpool Street to Cambridge and Liverpool Street to Bishop's Stortford lines. The frustrations to which they have been subjected have been enormous. Trains have been cut out. There has been overcrowding of subsequent trains and failure to meet connections. In addition, these people have been faced with ever-increasing fares, which have now reached a very high level indeed. The latest proposed cuts will inflict yet another blow not only on my constituents but on commuters who use these services around London.
I do not think it is fair that the British Railways management should reap the primary blame for this. The restrictions on cash provided by the Government are ultimately to blame. In these circumstances, the Government must accept that it is their fault that commuters are being obliged to accept these reductions in services.
The Secretary of State made clear that he believed that the answer was basically one of increasing productivity and becoming cost conscious. I would not deny for a moment that a high level of cost consciousness is desirable, but we must recognise, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out, that productivity improvements have their limits and they certainly ought not to be embarked upon if they threaten safety standards in any way.
The fact is that in other respects, in my view, one cannot achieve increased productivity without causing a severe deterioration in services. I have already raised the matter of the proposal to close 150 stations, as was said originally, at weekends and in the evenings. I have now been told that it may be only 120 stations. Many of these stations are not in rural areas; they are in inner London. It is quite deplorable that we should be allowing this to take place in our day and age when in previous ages, when undoubtedly the community was less wealthy than we are today, it was possible to provide a very much better service. Every cut increases the incentive to use the roads

and other forms of transport. If passengers defect from the railways, there will be a reduction in the number of fare receipts. That would provide a pretext for another cut in services. We face a vicious circle. We shall attract passengers to the railways only if British Rail provides a good service. That means that the Government must recognise that investment should be greater.
I have cited the hardships faced by my constituents. However, the proposed cuts will affect lines that serve terminals such as King's Cross, Euston, Paddington, Victoria, Charing Cross, Waterloo, London Bridge and Liverpool Street. Further investment is needed if some alleviation is to be provided.
Savings in labour costs will probably be balanced by an increase in the number of those unable to find employment and by a reduction in the earnings of others. The cost will ultimately fall on the public purse, even if British Rail and the transport system may not have to bear it. The Government should recognise that the level of support is inadequate. If the Government stick to these proposals, they must bear responsibility for the inconvenience and hardship caused to commuters and to the general travelling public.
It is no good trying to pass the buck. It is no good trying to blame the management of British Rail or the trade unions. The trade unions involved have an excellent record—I am glad that the Secretary of State is nodding in agreement—of supporting proposals to improve the quality of service that British Rail provides.
I turn to another issue that particularly affects West Essex. The Secretary of State will be aware that Essex county council has refused to give financial support to the Epping-Ongar stretch of the Central Line. As a result, London Transport has brought forward proposals for closure on the grounds that the Government should financially support all commuter services. A Conservative-controlled local authority is pressing the Government to take on greater financial commitments and to support commuters. I hope that the Secretary of State will clarify that issue.
The present level of investment in our railways is inadequate. The travelling public will be increasingly subjected to hardships and to deteriorating standards. The spirit of revolt will inevitably spread. The Government should realise that they will be responsible. Once again, I appeal to the Secretary of State to recognise the problems faced by commuters. In particular, the right hon. Gentleman should accept that more support and investment must be given if our services are to be maintained at a reasonable level in the years ahead.

Mr. Allen McKay: I shall not detain the House long, but it would be sad to miss an opportunity when the Minister is here to answer questions regarding the railways in my area.
The Beeching cuts in the 1960s coincided with the closure of collieries. Now, we read of the possibility that 50 collieries may close. One wonders whether it will percolate down to the railways and whether there will be more cuts than we at first envisaged.
I want to raise three matters. I hope that one of them will be answered in tomorrow's report about the electrification of the line between London and Sheffield. Sheffield has received disturbing news during the past few months about cuts in local government grants, loss of


assisted area status and as an enterprise zone. It will be a boost for the city if tomorrow's news is that the electrification of the line between London and Sheffield is to go ahead. I hope that the Minister will see that sufficient money is made available for this purpose.
The second matter concerns the passenger link between Sheffield and Penistone. It was the subject of a public inquiry. The need for the service in that area was demonstrated by the number of letters and petitions that were received by British Rail. It was one of the greatest outcries against a passenger service closure for many years.
The main item concerns the Woodhead line. I have written to the Minister on this subject on many occasions during the last two years. The answer that I usually get is that it is a matter not for the Minister but for British Rail. However, the time has to come when the Minister can no longer hide behind his ministerial cloak, and a decision has to be made. On this occasion, the decision is one of national importance because it involves the main line between Huddersfield, Manchester and Sheffield. The links on either side are complete passenger services, and the Minister says that the middle section is a freight service.
I wrote to the Minister on this subject on 6 January. As yet, I have received no reply. My letter asked him to meet a deputation of the main railway unions, representatives of the South Yorkshire county council and the cities of Barnsley and Sheffield and the Members of Parliament concerned with the line. That was over a month ago. I believe that it is a slight on the trade unions and the bodies involved that the Minister has not yet seen fit to reply. I do not ask him tonight for a specific date, but I asked for an assurance that he will see us within the next few weeks. I shall then be able to tell the people involved that the Minister has not forgotten them. I am sure that that would help to ease the situation.
Before I leave the matter, there is a further question. The Minister said in a letter that he has nothing to do with the section of the line from Penistone via Woodhead because it is a freight line. But it is not only a freight line. During six months of the year on Sundays, and as is published in the public timetables, it is a passenger service. No doubt, the right hon. Gentleman will say that that is only temporary. But what does "temporary" mean? To me, it means that something has gone wrong with one line, as sometimes happens, and, therefore, the other line is used as a temporary measure. But I am talking about a regular passenger service on a Sunday. It should therefore be subject to the same procedure as normal passenger lines—namely, a public inquiry, if the public so wish.
I hope that the Minister will reply on this subject, because precedents have been created in the past on such a point. In the case of summer-time services to certain seaside resorts, trains have run for four months of the year on Saturdays. When it was proposed to close the line, the Minister directed that a public inquiry should take place, and an inquiry was held. If it is right to run one service on a Saturday for four months of the year, it is equally right to run a service on a Sunday for six months of the year. I should like the Secretary of State to reply to this.

Mr. John Prescott: I should like to react to some of the remarks that have been made by hon. Members—all from the Opposition side of

the House, with the exception of the Secretary of State. It is somewhat amazing when one considers the heat generated by Conservative Members at Question Time regarding railways in the South-East. One could hardly call this late at night, even for South-East Members who are near home and, unlike Northern Members, do not have to stay here anyway. Presumably they were dashing for their last trains, which, according to the latest cuts, leave at about 7 pm. It is a dereliction of duty on their part that they are not here tonight when we are considering important investment matters—the public service obligation. The European Community says how much money will be available for unprofitable lines. We are concerned with social commitment and expenditure. Therefore, it is a bit much to hear protests at Question Time by Conservative Members about lack of money and deplorable services in the South-East only to find that they are not here to make their views known at the appropriate time.
All who have taken part in the debate have given examples of the deterioration of rail services in their areas. I do not intend to repeat their comments. However, it is interesting to take on board the argument about railways in the South-East, because the Monopolies and Mergers Commission was asked specifically to look at the quality of railway services in London and the South-East.
The Secretary of State referred to a number of points in that report. He informed the House of deficiencies in management, particularly in productivity and proper costings which the commission revealed, and said that the British Railways Board would be making a report to him on these matters with recommendations on how to improve them. Any improvement in these areas is to be welcomed.
However, the Secretary of State did not tell us about the investment constraints on the quality of services in the South-East railway system—a matter that was specifically excluded from the commission's inquiry. Anyone reading the report would have to agree that the management of British Rail comes out of it pretty well. The belief that poor services in the South-East are due to incompetent management and to labour exploiting its strength and not co-operating in productivity deals is not borne out by the report. Indeed, the report makes it clear that the quality of service will not be sufficiently improved by savings brought about by productivity gains.
The commission pointed out that it was specifically prevented from looking at the investment constraints. As the report makes such a strong point on this matter, it behoves the Secretary of State to say that his Department is considering the constraints on the services. If, as the report seems to indicate, there are other reasons for the poor quality of service, what is the Secretary of State doing to correct the investment deficiency in the South-East railway services?
In these less hurried circumstances, the Secretary of State will have plenty of time to address himself to these points. Outside the heat, push and pressure of Question Time when he has been asked these questions, perhaps he will outline the Government's view on investment constraints in the South-East.
A number of hon. Members, including my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), have pointed out that the problems of investment in the rail system did not start in May 1979. We want the Secretary of State to hear us say that. We do not believe that the inadequacies of investment in the rail system, which are


evident to all, started in May 1979. They go back further than that. Having said that, I hope that the Secretary of State will shut up saying that investment is at the same level as the investment provided by the previous Government, thereby implying that it is sufficient. We hope that he will cease ducking questions about the quality of investment by arguing that it is the same as the amount provided by the previous Government.
It is clear that to put off investment six or seven years ago was much easier than it is now. The investment cycle has reached a dangerous stage. Not only is the investment expensive to British Rail and inadequately maintained, but, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out when he reminded us of the safety inspector's report, we face serious considerations of inadequacy of investment, even in maintaining trains on tracks. The number of accidents and incidents of trains coming off tracks have been increasing considerably, and there is a correlation with the lack of proper maintenance investment in track.
The Secretary of State says that investment in track is outside investment constraints, but it still comes within the problems of the external financing limits. That causes problems for British Rail in deciding whether it can make investment that is commensurate with the speeds that it wants on certain lines. The problem of investment is crucial. It did not start only two years ago, but it must be solved.
According to The Observer at the weekend, the Secretary of State is fighting hard in the Cabinet for increased public expenditure. I assure him that we will not attack him if he announces £1,000 million investment in the railway system, picking up the call of my right hon. Friend the Leader of the Opposition in the North-East. My right hon. Friend pointed out that it is not an arid argument about whether one is for or against public expenditure but a question of spending money to keep engines on the lines with fewer accidents and a proper public service. That is what public expenditure means. If the Secretary of State comes to the House for £1,000 million of investment in any transportation system, whether for electrification or the maintenance of track, he will have our full support.
We welcome the Secetary of State's announcement that he intends to produce the report on electrification tomorrow. We shall be pressing him hard on that. We hope that an announcement of Government policy will follow shortly.
The Secretary of State referred to the parcels service, in which the losses are about £1 million a week. In our debate on the Armitage report, I asked whether the solution to the problems of the parcels business might have been to rationalise and integrate that section. Unfortunately, that was not done. The Secretary of State has made great play of the fact that the nationalised industry chairmen could not agree in the Freight Intergration Council. Apparently, that was not true. Perhaps the Minister will confirm that.
Although he was not the Secretary of State at that time, I am sure that the right hon. Gentleman has access to the reports of the council, which make it clear that the chairmen of the postal industry, British Rail and the National Freight Corporation reached agreement on the rationalisation of the parcels sector. If that solution had

been implemented by the Tory Minister in 1972–73, we should not now be facing the losses that the right hon. Gentleman spoke of tonight.
The Minister also informed the House of a further restriction in railway activity, with its consequential effect on railway business. I do not know whether he took time to look at the report. I hope that he will do so, if only to accept the arguments that integration is a workable and feasible project and should not be seen as a measure that people may refuse to implement. In that regard, he should take into account the Armitage report development and energy requirements.
The Tory ideology has undermined the rail system in its concept of integration because the direct beneficiaries of the parcels trade will be the private sector. There will be a growth of companies such as Securicor. That trade could have provided traffic for British Rail, but instead it will benefit the highly specialised private sector. That is true also in relation to inter-city services. It is the latest example of how Tory policy is beginning to undermine the policy of British Rail.
The Secretary of State told us tonight—we want to hear more when he replies—that he is somewhat concerned about the economics of the justification for inter-city. I may be wrong, but I was left with a distinct impression that investment in high-speed trains and inter-city was not producing the expected return. Was that a suggestion that he was considering whether he should continue with the present level of investment? I see that the right hon. Gentleman is shaking his head. I understand him to be saying "No."
I shall give him one reason why inter-city is not profitable. The Secretary of State has introduced the de-licensing of bus services. We have seen a tremendous growth in the express services. There is competition between the National Bus Company—a nationalised concern—and British Coachways. Fares have tumbled, to great acclaim by the Secretary of State. He even opened one of British Coachways' first services. The reality is that British Coachways has not survived well against the National Bus Company, which is expanding at a far greater rate and is running British Coachways off the road. Unfortunately, British Coachways has run itself off the rural bus services also—exactly as we predicted.
From information that we have received, it appears that on the inter-city network, especially some of the routes to the North-West, the National Bus Company has increased its ridership by about 200 per cent. They are not new passengers travelling to the North and South but passengers who were previously travelling on British Rail. They have changed to buses because of the cheaper fares to which the right hon. Gentleman referred. The bus service is producing more buses on our motorways on the national network, fewer services in the rural areas gaining more money from routes, and achieving a profitable return. But British Rail is feeling the effect of that policy. No doubt it will now have to knock on the Minister's door to suggest that the taxpayer should give it more money, or it will have to use much of the money that is needed for investment in the rail system.
That is the sort of Government policy that we said would undermine the integrated transport system. It will certainly undermine the rail system. I want to know exactly what the right hon. Gentleman thinks about that redirection of traffic from rail to bus and whether he is prepared to provide compensation for that difference.
We have already heard tonight that the Secretary of State feels that the economics of inter-city services have not proved to be good. What will be the consequences of those remarks? I have made a hurried and rather unexpected summing-up, but I hope that the Secretary of State will take the ample time that is available to him to answer all our questions.

Mr. Fowler: It is tempting to take the 56 minutes available to me to reply, but the House might not believe that I need such a long time in view of what I said earlier.
The debate has been constructive. It has not been on party lines. Only in the speech of the hon. Member for Kingston upon Hull, East (Mr. Prescott) did the old political problems and issues come up. For some reason, the hon. Gentleman has a thing about the Freight Integration Council, although no one else noticed its demise. He asked me about the de-licensing of buses. About 200 new services have developed as a result. Now, new bus services operate between cities and fares have come down.
I was speaking at a lunch today, and everyone there came from Exeter to London. The return fare between Exeter and London is £4. That illustrates the difference between the Government and the Opposition. We believe that the public should have the right to choose how they travel between cities. They should not be directed. Our information is not that which the hon. Member for Kingston upon Hull, East receives. Our information is that cheap fares and good service are attracting new people to the coach services. Most people would welcome that. New services and lower fares do not happen often.
Collect-and-deliver parcels have been mentioned. I must remind hon. Members that, although the figures might be regretted, on revenue of £40 million a year British Rail made a £40 million loss. The costs were £80 million and the revenue was £40 million. That is not the type of business that is in the interests of British Rail. It is not a business for the future. British Rail is right in its decision, and I hope that the House will agree that we were right to give it special transitional aid.
I apologise to the hon. Member for Keighley (Mr. Cryer), who was wearing his other hat, because the wording of the explanatory note is not as clear as it might be. The wording is exactly the same as that used in the 1977 order which was introduced by the right hon. Member for Stockton (Mr. Rodgers). I accept that improvements could be made.
I also apologise to the hon. Member for Penistone (Mr. McKay) because he has not received a reply to his letter about the Woodhead tunnel. I cannot promise to see a delegation, but I shall consider it. However, I promise that the hon. Member will receive a reply to his letter by the end of this week. Important policy issues are involved. British Rail is making that decision as a result of its judgment on the needs of its business and because of the expense of reinvesting.
I should like to make one general point about the debate. Whatever questions have been asked about the order and whatever points and criticisms have been made about myself or British Rail, no one has challenged the purpose of the order. Its purpose is to provide continuing payment of grant by the Government to the British Railways Board for the operation of its rail passenger system.
I believe that the hon. Member for Hartlepool (Mr. Leadbitter) missed the whole of my speech, but that did not prevent him from intervening. I listened to him with my customary attention. However, I remind him of what we are doing in the order. The limit on total cumulative payments which may be made from the end of 1978 was £1,750 million as provided for in the Transport Act 1978. The order will increase that limit to £3,000 million. That is what the debate is about. Unless I have misundersteed the intention of any hon. members who has spoken, no one denies that the order has to be made and no one wants to vote against it.

Mr. Leadbitter: The Secretary of State said that I missed his speech. His memory must be rather short. When I spoke, I apoligised to him. I thought that he would have been gracious enough to bear that in mind. I am surprised that his exuberance took him so far.
Will the Secretary of State comment on the Woodhead tunnel? This matter has been contentious, and he knows that it is serious. I am not aware of the conditions for a public inquiry, and there may not be the conditions to support one. However, the concern in the area is such that that is the mood of the people who are affected. Perhaps the Secretary of State could briefly say whether there is any possibility of considering a public inquiry or whether he does not have the powers to call one.

Mr. Fowler: In the letter which I shall write to the hon. Member for Penistone, I shall seek to set out the answer to that question and shall also deal more fully with other issues. We are dealing with a freight line. If we were dealing with a passenger line, there would be an inquiry, which would be taken by the transport users' consultative committee, which would report to me. The same rules do not apply on train services. That matter is up to the discretion of British Rail. Therefore, if the hon. Gentleman asks me whether there is a precedent for conducting an inquiry, the frank answer is that there is not.
The subject of productivity was raised by a number of hon. Members, including the hon. Members for Keighley, for Swansea, East (Mr. Anderson) and for Harlow (Mr. Newens). I agree with them that there has been a dramatic improvement over the last 20 years in the productivity of British Rail. I have always paid tribute to that. I pay tribute not only to British Rail but to the co-operation of the unions involved. That is important and genuine.
However, we must also face the fact that wages and salaries account for more than 60 per cent. of the cost of running the railways. There is a premium, and the greatest value must be placed on high productivity. That is what we are saying and what British Rail is saying. When it is said that over a period the railways could do with 38,000 fewer posts, I am quoting the figure in British Rail's corporate review, not from a departmental paper.
I repeat that the future of the railways is not only a matter for the Government. Every Government must have the future of the railways in mind. I hope that we have made it clear that we do. However, everyone who works in the railway industry must play his part. I do not want to put words into anyone's mouth, but at a meeting of the Railways Council, when leaders of important rail unions were present, I sensed that they understood that message. It is the message put forward by the chairman of British Rail. It should be supported on both sides of the House.
I believe that the memorandum from Commissioner Burke was issued for discussion. It has not come to the


Council of Ministers. On Monday I shall be discussing the matter and other transport matters with my colleagues in Europe. I in no way feel committed by the expression of opinion in the memorandum. I believe that it refers more particularly to other EEC countries.
I remain totally opposed to substantial cuts in the passenger rail system. How can we safeguard the future of rural rail services? The best way is by seeking to reduce costs. I therefore welcome the board's recent initiatives in developing low-cost operation techniques. With my hon. Friend the Member for Eye (Mr. Gummer), I travelled on the railbus service on the East Suffolk line. The service impressed me. It sets an example to other rural services. We should not for ever look backwards. We should look to the future to see what opportunities there are for achieving a better, more cost-effective rural service.

Mr. Anderson: When the chairman of British Rail makes dire predictions about the effect of low investment on the network, he surely has in mind possible improvements.

Mr. Fowler: With respect, that is a slightly different point.
I am aware of the board's concern about the condition of its physical assets. Some of the assertions have serious implications. I have only just received the board's assessment, and I want to discuss it with the board. I stress two points. First, the board has consistently made plain that the very high safety standards for rail travellers will be preserved. Secondly, the board has brought no information about specific services to my attention. It estimates that it needs to increase its annual expenditure on track and signalling. However, the additional sums that it is talking about are relatively small in railway terms. The estimate is less than £20 million to maintain the infrastructure on the fringes of the network. Clearly, the corporate plan will be one of our most important considerations when looking to the future.
I understand the concern of the hon. Member for Harlow about the reduction in rail services. No one likes such reductions. However, they have to be kept in proportion. Brititish Rail has suffered a loss of traffic and must, therefore, respond by making some changes in services. Clearly, some passengers will find the service less convenient. This is, however, a far cry from some of the predictions that are made about the effect of cuts in services. The service cuts are in line with one of the main recommendations of the Monopolies and Mergers Commission that the board should take action to adjust services to changes in demand. As a general policy, it is a policy that we should support. I think that the chairman of British Rail deserves support in putting that forward.
The hon. Member for Hartlepool raised the question of the external finance limit and finance generally. I mean no discourtesy to the hon. Gentleman, but I should like to reiterate the important point that the Government have recognised that British Rail has had financial difficulties over the last year. No one can argue—few have tried to argue—that we have not been flexible in our approach to these problems. I announced last September that the external finance limit for 1980–81 would be increased by £40 million to £790 million. We provided flexibility at the end of the year concerning the external finance limit that

the board had been urging not only on this Government but on the previous Government. It was this Government who gave it the flexibility.
The external finance limit for 1981–82 has been set at £920 million—again, an increase over previous plans. I believe strongly that we have sought to recognise the problems that British Rail has faced. The chairman of British Rail may feel the 1981–82 external finance limit to be a tough limit. That is undoubtedly the case. It is, nevertheless, a limit that British Rail accepts as something within which it can work.
I believe that the Government's record on investment is good. I understand what the right hon. Member for Barrow-in-Furness (Mr. Booth) and some of his colleagues have been saying. As they have also fairly stated, the investment problems of British Rail have not emerged overnight. We are putting £28 million into West of England signalling. Some of the signalling being replaced is 70 years old. That is the problem that the Government have inherited. It is the problem that we have had to tackle. At a time when restraints on public spending are severe, I believe that British Rail has been treated extremely fairly, not only in terms of the support going to it in passenger support but in terms of investment.
I have been asked about the objectives. The reason why we want to set new objectives is that we aim to improve. services. I agree with the hon. Member for Isle of Wight (Mr. Ross) that one of the problems has been Southern Region. One of the aims of setting new objectives—we may have to set targets and think of new ways of doing this—is to try to improve the service on that region. We are making no reductions in the passenger network. We need, for example, clearer accountability and clearer objectives for the London commuter services. That is what we are trying to develop.
This has been a good and constructive debate. The order provides for a continuation of the policy, which I believe is welcomed on both sides of the House, of realistic arrangements for Government support to British Rail. I believe that the railway system in this country has a great future. I do not believe that hon. Members need to take different sides on the issue. It is a future that the Government, the unions and the board want to see and to ensure. I urge the House to support the order.

Question put and agreed to.

Resolved,

That the draft British Railways Board (Increase of Compensation Limit) Order 1981, which was laid before this House on 28 January, be approved.

Orders of the Day — School Meals Service (Lancashire)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]

Mr. Stan Thorne: In opening this Adjournment debate, for which I am indebted to Mr. Speaker, I wish to make it clear that I shall give my hon. and learned Friend the Member for Accrington (Mr. Davidson) the opportunity to say a few words.
The recent press publicity in Lancashire given to this problem has highlighted the difficulties which face the school meals service. Some may consider that some of the observations are extravagant, but we shall examine that in the course of the debate.
The Lancashire county council, for example, has said that school meals now are worse than the meals served in our prisons. Others have shown that the numbers taking school meals have fallen by one-half during the past year. It has been reported that meals staff are doing the best they can within the financial resources available to them. Teachers are said to have observed that the meals presently being provided are disgusting. The nutritional value is not good, and the 40p charge is considered by teachers to be exorbitant in view of the food provided. Clearly, this necessitates a serious examination on our part.
I have obtained from the Lancashire education committee a sample two-course menu that is available in the schools for the five days from Monday to Friday. On one day, for example, the meal provided was vegetable and beef soup with added beef, bread rolls and sultana sponge. On another day it was a beefburger in barncake with onions—a sort of hot dog—and apple flan and mock cream. It is not surprising that Oliver Twists abound in Lancashire in consequence of that sort of menu.
If we are to examine the service in some depth we need to consider what happened from October 1979 to October 1980. There has been a reduction of 40·3 per cent. in the number of children in primary schools taking school meals. In secondary schools the reduction has been 15·6 per cent. Those are the reductions for the whole county. During the same period, the nature of the meals has changed and there have been two price increases, from 30p to 35p and, in the autumn term 1980, from 35p to 40p. One outcome is a large increase in the numbers of children bringing packed lunches. The figures are interesting. The most marked increase is in primary schools. In October 1979,·98 per cent. of children brought sandwiches, whereas in October 1980 there had been an increase to 40·2 per cent. That is a highly significant increase.
There are severe employment implications. It has been reported that the equivalent of 1,000 full-time staff have been lost in the school meals service. In district 6, which embraces my constituency of Preston, the percentage of children in primary schools taking meals has been reduced from 78·9 per cent. to 47·5 per cent.
The figures show that within the county in October 1980,10·6 per cent. of the children present in school on a specific day took a free school meal. In Preston the figure was 16·7 per cent. Put another way, within the county as a whole 22 per cent. of the children normally taking meals obtained a free meal, and in Preston, the figure was 31·3 per cent. The 10·6 per cent. figure of children present during a specific day taking a free meal compares reasonably with the national average of 9·9 per cent., but the 16·7 per cent. figure for Preston gives cause for serious concern because it may be a form of barometer indicating rising severe poverty caused by increasing local unemployment.
Unemployment during that same period has virtually doubled. Poverty and free school meals are inextricably linked. A sliding scale for eligibility for free school meals ranges from a net income of £46·80 for a family of three—a family with one child—to £107·80 for a family of eight—a family with six children. Those figures give no real clue as to how many people within those categories failed to apply. Are the regulations generally known, and are the allowances that families receive and that can be disregarded for purposes of net income fully understood by the people in the area? I think that many more children would be seen to be entitled to free school meals in Preston

and other parts of Lancashire if the county council's regulations covering entitlement were more widely known.
No doubt the Minister will have seen early-day motion 149, which is a reflection on school meals standards. My hon. Friend the Member for Blackburn (Mr. Straw) has been very much involved with the issue in his area, where considerable concern has been expressed, particularly about nutritional aspects of school meals.
I should like to emphasise, in regard both to what I have said previously and to the early-day motion, that this is in no way a reflection on school meals catering and other staff, who are anxious to restore confidence in the service under extreme difficulties, which stem mainly from higher prices and falling demand, and particularly the failure of the county council to provide the means by which the standard of nutrition could be improved.
The future of the school meals service in Lancashire is in jeopardy, and no commitment has been given by the Conservative-controlled Lancashire county council to continue the service. A tremendous campaign was waged at the turn of the nineteenth century for free school meals for necessitous children. Subsequently, a phrase was introduced that meant "detectable malnutrition". Now, as a consequence of Government policy, the concept of nutritional content of school meals no longer appears appropriate.
If Lancashire county council finishes up by providing meals only for those who are entitled to free meals, the social consequences should be obvious. The county council may find itself in a position in which it needs to recruit, at considerable expense, more child psychologists to cope with the reactions in that sort of situation among the schoolchildren who will feel branded in some way because they are the only ones receiving school meals.
Poorer quality meals and price rises during 1980 are said to have cost the county council about £1 million extra. The council refers to its having three choices—the raising of prices, the cutting of staff and an increase in demand. It has obviously already expended two of those choices, on pricing and staffing, but it seems quite incapable of recognising that increasing demand is a factor of both.
I should like to think that the Minister could advise the county council how to overcome its problems, but, of course, I recognise that although the county council is dominated by the same political philosophy as the Minister and his Government, the policy that it is pursuing has been created by the Government. Since it is the Government's policy which diminishes standards and causes mothers to describe the service and the meals as disgraceful, I consider that it is incumbent upon the Minister to set up an inquiry into Lancashire's school meals service without delay. I commend that course to him.

Mr. Arthur Davidson: I congratulate my hon. Friend the Member for Preston, South (Mr. Thorne) on initiating this short debate. I also congratulate my hon. Friend the Member for Blackburn (Mr. Straw) on what he has done to draw attention to the appalling state of the school meals service in Lancashire.
The attack on the school meals service is a particularly mean and nasty attack, because it affects badly and savagely the weakest members of the community. In my constituency, as in that of my hon. Friend the Member for Preston, South, there is a high proportion of low-income


families and, sadly, a growing proportion of families in which there is an unemployed member, either man or woman.
The effects have meant that in some families there is discrimination among the children. As a result of the lowering of the threshold, one family has been able to send only one of its children for school meals, and two of its children now have to go to school with low-cost sandwiches. That is not a healthy situation within a family.
It is attacks such as this which have led to the formation of the Accrington-based school meals campaign. I should like to quote from what one lady who helps to serve meals has said in the report which that campaign is compiling, because the attack has been not merely on nutritional standards for children and, therefore, upon their parents; it has been an attack upon wage earners—admittedly very low wage earners—in the family. The lady said:
Last week my husband was made redundant and my daughter goes to school. I am the only person bringing in a wage. So how can it be pin money?
Lancashire county council said that many such people worked only for pin money. The Minister knows that many working-class families, particularly in North-East Lancashire, survive only if the woman works.
It is reported that Lancashire county council said that the new snack lunch would mean less waste. Less waste for whom? Again I shall quote from the report. A member of the school meals staff said:
Forty children come with sandwiches and we now have a bucketful of waste left after each day from the sandwiches.
My hon. Friend told the House about the percentage of those who use the school meals service. The situation is deplorable. As a society, we should be ashamed. As the Minister knows, the Secretary of State intends to visit Blackburn on Friday. I shall cut short the remarks that I intended to make, but I should inform the Minister that members of the Accrington school meals campaign have requested me to ask the Secretary of State to see them. It would be unfair to ask the Minister to give that assurance tonight. They hope that they will be able to speak to the right hon. and learned Gentleman and to bring home to him the savage way in which the cuts have hit them and their children.

The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): I am grateful to the hon. and learned Member for Accrington (Mr. Davidson) and to the hon. Member for Preston, South (Mr. Thorne) for having given me an opportunity to participate in this important debate. I listened with great interest to what they said about the school meals service in Lancashire. In the media in recent weeks, and in this debate much attention has been focused the comparison drawn by the hon. Member for Preston, South and by the hon. Member for Blackburn (Mr. Straw) between one of the meals served in Lancashire primary schools and, according to the media, a meal that was provided by the Blackburn workhouse in 1933.
It comes as something of a surprise that the hon. Member for Blackburn is not here. I accept that there may be other constraints on his time that prevent his being here. However, in recent weeks much comment has been

initiated by the hon. Gentleman. This subject is important enough for the hon. Gentleman to join his hon. Friends on the Opposition Benches.
Whilst such comparisons make good headlines, they are very misleading and do great damage to the school meals service. They also denigrate the efforts of school meals staff, who work hard and imaginatively to provide meals for pupils. The unfair and destructive criticism that has been heard not only in recent weeks but over a series of months is one factor that has contributed to the fall in take-up since 1979. Therefore, we must establish the facts and put them into perspective.
The hon. Member for Preston, South made certain assertions that I wish to put right. It has never been the intention that a school meal should provide for the full daily nutritional needs of schoolchildren. Even before the Education (No. 2) Act 1980, the Department's nutritional guidelines were that the meal should meet one-third of the child's daily energy requirements and about 40 per cent. of the protein requirements. It follows, therefore, that the majority of a child's needs was assumed to be met by the meals provided at home by the parents. If hon. Members say that children do not have the balance made up at home, I suggest that this is the responsibility of the parents, not of the State or the education service. We must also bear in mind that pupils spend nearly half the year outside school, when provision of their meals is entirely a matter for the parents.
One conclusion to be drawn from this, in passing, is that the critical comparison made by the hon. Member for Blackburn between the school meal and what was provided in the workhouse in 1933 would apply with equal force to the school meals that were being provided prior to 1980.
Let us now consider Lancashire. Again, what are the facts? Under the Education (No. 2) Act 1980 it is a matter for each local education authority to decide what to provide at midday, and there is no Government control over this. Nevertheless, I asked my officials to obtain from Lancashire details of what it provides. We have heard the interpretation by the hon. Member for Preston, South of what the Lancashire school meals service provides.
I understand that all primary school meals are planned on the basis of a 20-day menu cycle, which has been carefully constructed in consultation with the Health Service dieticians to provide overall the same proportion of the recommended daily amounts of protein and energy as was provided in previous years. That is to say, over a four-week period a pupil will receive in total one-third or more of the daily amounts of energy and protein recommended by the DHSS advisory committee on medical aspects of food policy. Clearly, if there is to be variety in what is provided, there will be some days during the four-week period when some aspects of the nutritional content of the meal will be below the average. Equally, there will be days when it is above the average.
The school meal referred to by the hon. Member for Blackburn in his comments on the north-west of England happened to be below the daily average for protein content but above the average for energy content. As examples from the authority's menu cycle which have a higher protein content, I can quote Lancashire hot pot, potato and meat pie and beefburger and chips. For these meals parents pay 40p, which is substantially less than the cost of providing the meal. By any standards, it represents good value for provision by the authority, which, as an outside


caterer, has to meet substantial staffing costs and overheads.
What the authority is not claiming to do is to provide a meal that is suitable as the main meal of the day. For this reason, meals such as the one described have less bulk than would be appropriate to a main meal. Again, in passing, it is doubtful whether many children today would think much of being given half a pound of dry bread with their meal, as was apparently included in the workhouse dinner.
Because the hon. Gentleman referred to nutrition, I should like to quote from a newspaper from the North-West an article by Jill Sutton, the education correspondent, in which she said:
Professor Arnold Bender, head of the nutrition department at Queen Elizabeth College, London, said that the children would be eating at least 760 calories—very near the 800 calorie target set by the Department of Education.
That article goes on to describe the meal that was consumed that day. It is important to put on record that the nutritional content of meals is well understood and acknowledged by the Lancashire county authority.

Mr. John: I am not in a position to comment on the situation in Preston, Accrington or Blackburn, but I should like to place on record that, from my recollection, none of my constituents has written to me or come to see me in my surgery about their unhappiness at the school meals in the Pendle area.

Mr. Macfarlane: I am grateful to my hon. Friend for that observation, because it helps to put this discussion into perspective.
In 1979–80 the subsidy on the school meals service in Lancashire amounted to £13½ million. That represented a substantial subsidy on every meal provided, taking the average over paid and free meals, for pupils and adults of 43p. Lancashire therefore decided, in line with Government policy, to seek a substantial reduction in its net expenditure on school meals. It is aiming to do that, as I have already made clear, without reducing the nutritional standard of the provision in primary schools. It is seeking cheaper and more efficient ways of providing meals. It has kept its price increases to a level that is below the national average. The House must understand that. In secondary schools it has introduced the cash cafeteria system, which, experience shows, is likely to encourage pupils to continue taking a meal at school.
Hon. Members who were present at Question Time today will acknowledge the force that I attach to urging local authorities to become more conscious of what our young people expect to see in schools. The hon. and learned Member for Accrington spoke about a bucketful of waste caused by sandwiches being consumed on the premises, but the bucketsful of waste have also resulted from the traditional two-course meals, which, to the delight of many young people, are progressively being eliminated.
I am confident that Lancashire county council is seeking cheaper and more efficient ways of providing

meals. The proportion of Lancashire secondary pupils taking a meal in October 1980 was higher than in the country as a whole. That is a commendation for the way in which the county authority has shown flexibility and open-mindedness. The figure was also nearly as high as that for the country as a whole in 1979. Lancashire is an authority to be wholly commended. I am strongly critical of some of the cheap electioneering which has, alas, taken place in recent weeks and which could undermine the stability of the school meals service in Lancashire.
Hon. Members refer to the increase in the number of packed lunches in Lancashire, and I wish to quote some statistics. In 1975, a total of 163,000 pupils took packed meals to primary schools. In 1977, as a result of price increases by the previous Government, 408,000 were taking packed meals. In secondary education, nationally, in 1975 a total of 316,000 pupils were taking packed lunches to school. In 1977, the figure was 616,799. That gives some indication of the tremendous growth that occurred in that two-year period. It is a common trend over the past 10 years or more that there is a steady increase in the numbers who take packed meals to both primary and secondary schools.
Hon. Members do not always appreciate the damage that they do to the service that they claim to be supporting when they make the sort of generalised, unfair, inaccurate and destructive comments that we have been hearing not only in recent weeks from the media in the North-West but, to a certain extent, tonight. School meals have come in for criticism since the year dot, but they have been progressively improving over recent years.
Criticism is often unjustified and it is particularly damaging at this time, when the staff in many authorities are doing their professional best to provide attractive nutritious meals at prices that represent good value for money. They are not helped by loose talk about poor meals, low nutritional standards or a collapsing school meals service. I wonder how many parents in Lancashire, reading press reports of the comments by the hon. Member for Blackburn or the speech of the hon. Member for Preston, South, will decide that they no longer wish their children to have a school meal.
I urge the hon. Members who have spoken, as I would have urged their colleagues who would have been present if they believed the subject to be of true importance, to find out precisely what is happening in the schools in their constituencies.
The fact is that the meals planned for Lancashire primary schools are up to the standards of nutrition that were recommended prior to 1980. At 40p, that represents a considerable achievement, and the authority and its catering staff, who work long hours from long before schools open, deserve to be congratulated. The increase in the price reflects no more than the increase in wage rates and food costs over 12 months.
By its good housekeeping, Lancashire has reduced its net expenditure on the school meals service by about £4 million. with increased take-up of paid meals, it would be able to increase the number of kitchen and canteen staff hours worked and increase its expenditure savings. That


is what the service in Lancashire is trying to do—to attract back to the school meal those pupils who at present are taking their own food.
If the paid school meals service in Lancashire primary schools were to collapse, the country will know after tonight's debate that the destructive and carping criticism of Labour Members, not least the hon. Member for

Blackburn, who has not attended the debate, is totally destructive.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-four minutes past Eleven o'clock.